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U.S. government bond yields retreated after minutes from the Fed's policy meeting earlier this month revealed U.S. central bank officials mostly agreed on the view to begin reducing the central bank's massive balance sheet later this month.
The two-year note yield, which is highly sensitive to shifts in Fed policy, retreated by 0.2 basis point to 1.306 percent, after rallying to 1.340 percent in midday trading.
The yield on the benchmark 10-year Treasury note, fell 1.9 basis point to 2.266 percent, while the 30-year bond yield edged down 1.1 basis point to 2.935 percent.
Minutes from the May meeting of the Federal Reserve's rate setting committee showed there was broad consensus to wind down the U.S. central bank's $4.5 trillion balance sheet. In order to achieve this, they would back a gradual halt to the reinvestment policy.
While talk of the Fed's portfolio signalled a hawkish tone, analysts said the minutes sent out mixed signals. Investors shrugged out the minutes' cautious tone and looked forward to a June rate hike a near-certainty, with majority of the FOMC agreeing another rate hike should happen soon. Traders are now seeing an 83 percent chance of further monetary policy tightening in June.
