Treasurys extended their slump on Wednesday, sending the 10-year yield to its highest since June, amid a steam of negative news for bonds.
President Barack Obama's agreement to extend some Bush-era tax cuts sparked alarm among Treasury investors worried about the ballooning budget deficit. Its ability to stimulate the economy also would be a negative for bonds, driving up inflation and potentially allowing the Federal Reserve to avoid extending its bond-buying program.
Those concerns have been layered on top of an overall improving economic picture that suggests higher inflation and the need for higher rates. Many investors have cashed out of their heavy Treasury holdings accumulated earlier this year in anticipation of the Fed's $600 billion bond-buying program, launched a month ago.
Source: Wall Street Journal