Treasury yields rose following new data revealed that the U.S. private sector added 250,000 jobs during the month of December, beating Wall Street expectations by about 60,000. The month was the best for job creation since March, bringing the total private payroll growth as gauged by ADP and Moody's to 2.54 million.
The news comes a day before the Labor Department releases its monthly report on the employment situation. Economists and central bankers alike will be eagerly awaiting the Friday release for any signs of wage growth in addition to the headline jobs numbers. Wages increases have remained elusive despite a seemingly tight labor market.
Yields declined in the previous session following the publication of the latest minutes by the Federal Open Market Committee (FOMC).
The U.S. central bank's December minutes revealed that the final interest rate hike of Janet Yellen's era as Fed chair was met by a divided central bank; however, the scales are now tipped towards the more hawkish voices.
At the meeting, the U.S. central bank approved to increase interest rates by a quarter-point, although concerns over inflation still remain.
Geopolitics is expected to linger at the back of investors' minds, as rising tensions between the U.S. and North Korea continue to put global markets on edge.
On Tuesday, President Donald Trump tweeted that that his "nuclear button" was "much bigger and more powerful" than the one controlled by North Korean leader Kim Jong-Un.
—CNBC's Patti Domm contributed to this report