Treasury yields hit a six-month high Monday on optimism about the world economy and concern about the U.S. deficit.
Yields have been steadying climbing as investors bet that a stronger world economy will lead to higher interest rates, Reuters reported.
"If the market really thinks there will be a rate hike within a year, then the two-year yield could rise near 1 percent," said Tomoaki Shishido, a fixed-income analyst at Nomura Securities in Tokyo, adding that he did not believe there would be such a rate rise.
Yields also rose in the aftermath of the Obama-McConnell tax deal with investors worried that lower taxes will add to the U.S deficit. The deal extended Bush era tax cuts.
U.S. Treasury yields were up around 4 basis points to 3.365 percent, having earlier hit levels not seen for six months.
Why do investors make the decisions that they do?View Course »