The 10-year Treasury note yield — which has been trading in a tight range between 2.3 and 2.41 percent for the entire month of November — jumped to 2.43 percent by mid-afternoon after a relatively lethargic morning.
With the Senate Budget Committee having approved the Senate's tax plan on Tuesday, the debate shifted to closer to a floor vote. McCain, a longtime Republican and one of the longest holdouts on the tax plan, signaled Thursday afternoon his support for the bill. Following the news, both the Dow Jones industrial average and bond yields moved higher.
Investors have been eagerly awaiting tax reform since the election in 2016, yet doubts over whether the Republican-led Congress could achieve this before the year is out continues to weigh on sentiment. Critical to the bill is a provision to cut the corporate tax rate to 20 percent.
In equity markets, following news of McCain's go-ahead, equities took yet another leg up, with the Dow Jones industrial average adding over 300 points and smashing through 24,000 for the first time ever. More and more investors seem to be betting that the GOP passes its first major legislative victory before year's end.
While eyes were fixed on tax discussion, data also turned heads Thursday.
U.S. personal income rose 0.4 percent in October, coming in higher than the 0.3 percent increase expected by economists polled by Reuters.
Meanwhile, the number of American filing for unemployment benefits fell for a second straight week. Initial claims for state unemployment benefits slipped 2,000 to 238,000, suggesting a tightening labor market.
—CNBC's Fred Imbert contributed to this report