The moves in the bond market come as China announces brand-new tariffs on 106 U.S. products, including cars, whiskey and soybeans. The move arrives less than a day after President Donald Trump issued a list of Chinese imports that the U.S. administration aims to target as part of a crackdown on what the president sees as unfair trade practices.
Markets have already been on edge of late amid concerns over the U.S. administration's proposed tariffs on the Asian nation and potential tighter regulation of the domestic technology sector.
But the reaction in the bond market was muted compared to the moves seen in stocks. The major averages opened sharply lower before recovering some of those losses.
"Everyone took this as new news but it was more of the same," said Anthony Conroy, president at Abel Noser. "Aside from the soybeans and cars, this is not new."
In economic news, the ADP National Employment Report showed private companies added 241,000 jobs in March, more than the expected gain of 205,000.
The services purchasing managers' index (PMI) slipped to 54.0 in March from 55.9 in February. Meanwhile the non-manufacturing ISM index came in at 58.8 for last month, missing expectations.
—CNBC's Sam Meredith and Fred Imbert contributed to this report.