Bond markets around the world stabilized from Tuesday's selloff tied to hawkish comments from two European Central Bank officials, which propelled the 10-year German Bund yield to a two-month peak and the five-year US yield to its highest level since April 2011.
Some investors said Tuesday's yield rise was partly a reversal of the drop linked to typical year-end buying.
"A majority of yesterday's move was a move back of what happened over the year-end holiday," said Jason Celente, senior portfolio manager at Insight Investment in New York.
Wednesday's initial drop in US yields faded following a stronger-than-forecast report on US manufacturing from the Institute for Supply Management.
The industry group's index on US factory activity unexpectedly rose to 59.7 last month from 58.2 in November. Analysts polled by Reuters forecast the ISM factory index likely came in at 58.1.
Evidence of further expansion in the factory sector will likely support the notion of steady US economic growth, perhaps allowing the Fed to increase rates up to three times in 2018.
Investors are also awaiting clues on the path of future rate hikes in the minutes of the Dec. 12-13 meeting of the Federal Open Market Committee (FOMC). They hope the minutes, set for release at 2 p.m. (1900 GMT), will provide a better sense of the FOMC's view of business activity before the passage of the biggest rewrite of the US tax code in 30 years.
"They want to know what the Fed was thinking about before tax reform was passed," Celente said.
At 10:37 a.m. (1526 GMT), benchmark 10-year Treasury yield was down 0.5 basis point at 2.460 percent, while the 30-year yield was down 0.6 basis point at 2.806 percent.
The two-year yield reached a nine-year high at 1.939 percent. It was last up 0.8 basis point to 1.931 percent.
Tuesday's yield spike also stemmed from bond dealers hedging the slate of corporate bonds they underwrite this week, analysts said.
Companies are expected to sell $35 billion in investment-grade corporate bonds this week, according to IFR, a Thomson Reuters unit.