Treasurys declined Wednesday, pushing yields up, as the size of the government's stimulus package grew to nearly $900 billion.
Ten-year note yields ) rose 2 basis points to 2.56%. A basis point is 0.01%.
A larger spending plan leads to more debt issuance, making investors demand higher yields.
President Barack Obama's stimulus proposal may be voted on by the House of Representatives later Wednesday. See story on stimulus plan.
Reports that the government is moving closer to creating a "bad bank" to buy up toxic assets that have wreaked havoc on the global financial system is also reducing investors' desire for the relative safety of U.S. debt.
Later in the day, the Federal Reserve is expected to end its policy meeting.
Analysts don't expect any change to the central banks' target interest-rate range or economic outlook, released in a statement due at 2:15 p.m. Eastern time.
"There is no chance that the Fed can do anything other than reiterate continued economic weakness and diminishing inflation going forward" or a commitment for a zero interest-rate policy," said David Ader, head of government bond strategy at RBS Greenwich Capital.
Instead, interest is focused on what details may come out of the Fed's plan to buy securities backed by consumer and small-business loans or possibly Treasurys.
While the hope of the Fed buying Treasurys has been credited with keeping yields near their historic lows, others say it makes more sense for the central bank to continue buying other types of assets that have struggled to find buyers.
"We don't think Treasury rates are an issue inhibiting a recovery directly," Ader wrote in an e-mail. "The Fed's bullets would be better spent buying credit and mortgage stuff to bring real lending rates down."
