Treasury debt prices fell Wednesday as investors took profits from a rally that has pushed yields to four-year lows amid fears of a possible U.S. recession.
Investors also did some selling of bonds to buy back beaten-down stocks in the wake of Wall Street's worst rout in nearly a year on Tuesday.
The rebound in stocks on Wednesday helped pull bonds back from the highs reached during the worst of the equities selling. Tuesday's bond price gains pushed short-dated yields below 2 percent and near their lowest since early 2004.
"There is a stronger stock market today, and the Treasury market just seems to be way ahead of itself so that you are going to see some profit taking," said Bill Hornbarger, chief fixed-income strategist at A.G. Edwards & Sons in St. Louis.
Benchmark 10-year Treasury notes were trading 12/32 lower in price for a yield of 3.61 percent from 3.57 percent late Tuesday.
An auction of $13 billion of new 10-year notes Wednesday afternoon was met with near-average demand, and bonds pared some losses following the sale.