2018.01.2419:56:00UTC+00U.S. Government Bond Yields Climb as Dow Hits Fresh Record

U.S. Treasury prices declined on Wednesday, causing yields to rise again as the Dow Jones Industrial Average hit a new record.

The yield on the benchmark 10-year Treasury note ended at 2.654 percent, against the 2.622 percent during the previous day. The yield on the 10-year Treasury note, which rise when bond prices decline, has increased in five of the last six sessions, after closing at the highest level in over three years earlier in the week.

Expectations that a rise in global economic activity will extend into 2018 have driven up the stocks to reach record levels in recent sessions while weighing down prices of government bonds, which traditionally perform well when investors have doubts regarding the economic outlook.

Federal-funds futures, used by markets to place bets on the course of interest rates, showed on Wednesday an almost 58 percent chance that the Federal Reserve will hike short term rates at least three times this year up from 40 percent odds a month prior.

Increasing bets of multiple rate hikes have driven up rates on shorter-term bonds,which are usually more reactive to changes in interest rate outlook. The yield on the two-year Treasury note ended at 2.084 percent, up from 2.042 percent on Tuesday, hitting a new 52-week high.

On Wednesday, the Treasury Department sold $34 billion of five-year notes and $15 billion in two-year floating-rate securities as part of a scheduled auction of $103 billion of notes this week.