Long-dated US Treasury yields climbed to their highest levels in decades, as robust consumer spending data reinforced expectations that the US economy can withstand higher interest rates.

The 30-year Treasury yield rose as much as 6 basis points to 5.63% on Wednesday, the highest since 2002. The move followed data showing that US consumer spending grew at its fastest pace in more than a year in August. The Treasury Department announced it would buy back up to $6 billion of longer-dated bonds on Thursday.

"It really feels like a buyers' strike. The overall price action remains pretty ugly," said John Briggs, head of US rates strategy at Natixis Corporate & Investment Banking. Dan Carter, a senior portfolio manager at Fort Washington Investment Advisors, said: "A lot of investors had already positioned for lower rates, so they may not have much capacity left to add more."

Wednesday's data showed the US economy remains resilient, creating conditions for the Federal Reserve to keep raising rates in the coming months, and long-dated Treasuries extended their decline. Inflation-adjusted personal spending rose, and ADP Research data showed that US private-sector employment growth in September also exceeded economists' expectations. John Canavan, an analyst at Oxford Economics, said the stronger economic data kept the yield curve steep and "long-term yields edged a little higher." He added that ahead of Friday's nonfarm payrolls report, "traders may also be reluctant to make any major position adjustments."

Long bonds stayed under pressure after the US Treasury Department unveiled a plan to buy back 10- to 20-year Treasuries. The Treasury's two previous long-bond buyback operations were both planned at up to $6 billion, but the final sizes disappointed investors. Angelo Manolatos, a rates strategist at Wells Fargo Securities, said: "I think the buyback has the biggest impact on liquidity conditions and spreads. A catalyst that is bad for economic growth may be needed to drive long-term rates consistently lower."

Short-term yields fell. At the other end of the curve, the two-year Treasury yield, the most sensitive to the Fed's policy path, fell as much as 5 basis points to 4.82%, the lowest in more than a week. The move followed data showing the Fed's preferred inflation gauge came in below expectations. The figures prompted traders to lower their expectations for a Fed rate hike in October. Market pricing showed about a 36% probability of a hike, down from nearly a coin flip before the data. Expectations for an October hike have been declining since Tuesday. New York Fed President John Williams said that day that one more rate increase later this year "may be appropriate" to curb inflation. The Fed delivered its first rate hike since 2023 earlier this month.