US treasury yields rise

US treasury yields rose on Wednesday to three-week highs, as oil and stock prices gained, reducing demand for safe-haven bonds, and as new sales of corporate debt also weighed on the market.
Oil prices rose 4 percent on Wednesday after data showed a smaller-than-expected US crude build, helping to also send stock prices higher.
"The oil shift has been significant... if you look at the 'risk on' that's been in vogue for at least the last couple of weeks, and now at oil breaking up to a new high, all those things are weighing on the market," said Tom Tucci, head of Treasuries trading at CIBC in New York.
Corporate debt sales by companies including Goldman Sachs also pressured government bonds, in a week when no major economic releases were due to sway investor sentiment.
Bonds saw additional weakness after yields broke above a tight range that they had been trading in since the beginning of April, leading some investors to unwind trades.
Benchmark 10-year note prices fell 20/32 to yield 1.85 percent, up from 1.78 percent on Tuesday. Yields had held between 1.81 percent and 1.69 percent since the beginning of April.
"We're now moving through levels people once thought were supportive and they are stopping some people out," said Tucci. "It's a little bit of a liquidation."
Investors focused on next week's Fed meeting, which will be watched for any new indications on when the US central bank is next likely to raise rates.
The Fed is seen as unlikely to hike rates this month with market-based indicators also showing low expectations, of only around 11 percent, of a rate increase at its June meeting.
Low market expectations may encourage the Fed to adopt a more hawkish tone so investors are prepared if the Fed decides to raise rates, though they are also wary of provoking market panic that could derail their ability to execute a hike.
"I think they are going to try to sound a more hawkish note but if they try to tighten the market conditions up materially then financial conditions could tighten too much," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.