The FOMC was the center of attention Tuesday. The policy-making arm of the Federal Reserve is widely expected to hike rates for a third time in 2017, marking the end of chair Janet Yellen's tenure at the central bank.
The body is expected to deliver its decision on interest rates Wednesday.
In October, Fed minutes showed that a rate hike was all but certain during this holiday month, despite the low level of inflation. Investors will also be waiting with bated breath to seen what the U.S. central bank could say on U.S. tax reform. With Republican fiscal stimulus looking more certain, the central bank may seek to rein in rates in an effort to dampen any market overheating.
In other news, data boosted yields higher Tuesday morning after the U.S. Labor Department reported that producers in the United States posted the biggest annual gain in prices in nearly six years.
The Labor Department said that its producer price index (PPI) for final demand increased 0.4 percent last month, pushing its 12-month gain through November to 3.1 percent.
While the Federal Reserve tracks both the PPI and CPI for insights into inflation, the central bank's preferred gauge is the the personal consumption expenditures (PCE), due out later this month.