Treasury yields marched higher on Tuesday as traders awaited the Federal Reserve's decision on interest rate hikes due out Wednesday.
The yield on the policy-sensitive 2-year Treasury rose a basis point to 3.96% after reaching 3.983% — a level it had not hit since 2007. The yield on the 10-year Treasury last traded up 8 basis points to 3.567%. Earlier in the session, the yield on the 10-year note jumped to 3.593% to trade near levels not seen since April 2011.
Yields and prices have an inverted relationship and one basis point equals 0.01%.
Treasurys
The Federal Reserve's September meeting, where the central bank is set to make decisions about how much it will hike interest rates to curb persistent inflation, is due to begin on Tuesday. Analysts and traders are anticipating a 75 basis point hike, which markets have already begun to price in.
Others believe the Fed will go further than that and implement a 100 basis point increase, which would be the largest rate hike in 40 years.
"If the Fed moves its dots higher, markets' anticipation of further hikes should move up alongside pricing in more firmly rate increases of similar magnitude. Current market expectations have the Fed's 2.25-2.50% target range moving to 4.0-4.25%, if not above by year-end," ING analysts said.
Sharp moves higher in bond yields have further fueled concerns that rates haven't hit their peak just yet.
"It is a struggle for equities when bond yields go higher and bond yields are going higher," Hightower's Stephanie Link told CNBC's "Halftime Report" on Tuesday. "I know we're all focused on tomorrow — do they go 75, do they go 100. It doesn't matter, rates are going higher."