In currencies, the dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.06% to 99.60, with the euro EUR= up 0.03% at $1.1582.
Spot gold XAU= fell 1.11% to $4,366 an ounce.
Wall Street weakens as technology stocks fall
Wall Street's main indexes hit their lowest in two weeks, pressured by losses in heavyweight technology stocks.
"The yields are troubling people because it portends a tighter environment and it's going to be more expensive to borrow money," said Kim Forrest, chief investment officer at Bokeh Capital Partners. "Especially in this whole AI thing where time to pay it back is uncertain. It makes for a nervous investor environment."
Elevated yields tend to weigh on equities by making stocks relatively less attractive to investors, and by raising borrowing costs for capital-intensive companies pouring money into AI infrastructure.
The Nasdaq Composite .IXIC fell 1.05%, the Dow Jones Industrial Average .DJI dipped 0.12% and the S&P 500 .SPX was down 0.50%.
The pan-European STOXX 600 .STOXX index fell 0.69% and MSCI's gauge of stocks across the globe .MIWD00000PUS dropped 0.63%.
The CBOE Volatility Index .VIX, Wall Street's fear gauge, hit its highest in more than a week.
Investors are now turning their attention to Wednesday's release of the Fed's latest policy meeting minutes, as well as next week's Jackson Hole symposium, which will be closely watched for clues on how policymakers are interpreting recent economic data.
"Given the reduced information content of the FOMC's policy statement and Fed chair (Kevin) Warsh's press conferences, the minutes from the FOMC meetings arguably have become more important in conveying the balance of views among policymakers," said Jonas Goltermann, chief markets economist at Capital Economics.
The Federal Open Market Committee is the Fed's interest-rate-setting body.
Yields stay elevated as Middle East conflict fears rise
U.S. government bond yields eased slightly on Tuesday, though longer-dated yields remained near multi-year highs after the 30-year Treasury yield earlier touched a level not seen since 2007. The move came as fears of an escalating Middle East conflict stoked inflation worries and weighed on stocks.
Oil prices were slightly higher, gaining for a third straight session, as prospects for a U.S.-Iranian peace deal dimmed after Tehran said it would adopt a more offensive stance and Washington ruled out extending a ceasefire deal.
U.S. crude CLc1 rose 0.82% to $85.17 a barrel and Brent LCOc1 rose to $91.37 per barrel, up 0.55% on the day.
Yields have risen despite a recent run of soft U.S. economic data easing concerns about an imminent Federal Reserve rate hike. Traders now see just a 35% chance of a hike at the Fed's September meeting but 68% odds of an increase by December.
A resurgence in inflation could renew expectations for a faster pace of rate hikes.
"We're living in this world where we're going to have supply shock after supply shock," said Will Compernolle, macro strategist at FHN Financial.
The costs of the ongoing Iran conflict are also adding to fears over the U.S. fiscal trajectory.
Treasury yields and global bond markets remain under pressure
The yield on the U.S. 30-year Treasury bond US30YT=RR was last down 2.32 basis points at 5.2868%, after reaching 5.3371%, the highest since 2007. Benchmark 10-year note yields US10YT=RR fell 1.6 basis points to 4.708% and got to 4.7478%, the highest since January 2025. US/
The rise in U.S. yields coincided with Japanese government bond yields climbing to 30-year highs, raising concerns among analysts that as Japanese yields become more attractive, domestic investors — particularly pension funds and insurance companies — could begin shifting capital out of U.S. debt and into Japanese bonds.
Such a shift would add further upward pressure on Treasury yields. Japan's 10-year bond yield was hovering just below the 3% threshold for the first time since the mid-1990s, while euro zone bond yields also sat near multi-year highs.
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