The US 10-year Treasury yield and 30-year Treasury yield rose to fresh multi-year highs on Tuesday.
The benchmark US 10-year Treasury yield reached 3.252 percent, its highest since May 2011, before retreating to 3.248 percent.
The 30-year yield reached a four-year high at 3.439 percent before pulling back to 3.4337 percent.
US Treasuries have been sold off recently as strong data fueled fears about rising inflation and a potentially faster pace of rate increases by the Federal Reserve.
Treasuries have had a sort of safety net up to now as rising yields tend to dampen stocks and threaten the economic outlook, thus putting pressure on the Federal Reserve to go slow on policy tightening.
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Yet recently the Fed has sounded so bullish on the economy and so hawkish on rates that the net has become frayed.
“The size and speed of the bearish bond impulse would suggest a collective shift in market thinking about the US growth prospects and policy projections,” said Damien McColough, Westpac's head of rates strategy.
“The Fed's expected 2019 profile has moved from just below 2 hikes to 2.5 hikes being factored-in.”
That shift has underpinned the dollar against a basket of currencies where it stood at 95.677, from a low of 93.814 just a couple of weeks ago.
Italy's borrowing costs have surged as a war of words between Rome and the European Union over the country's budget plans escalated.
The yield on Italian government 10-year bonds rose more than 20 basis points to 3.626 percent, the highest since February 2014, while Italy's FTSE MIB stock index fell to its weakest since April 2017.
Brazil's real currency hit a two-month high and stocks jumped after market-preferred presidential candidate Jair Bolsonaro's strong first-round win on Sunday.
In commodity markets, gold got a modest safety bid at 1,191.10 dollars, having fallen 1.4 percent overnight.
Oil prices rose on Tuesday as more evidence emerged that crude exports from Iran, OPEC's third-largest producer, are declining in the run-up to the re-imposition of US sanctions and as a hurricane moved across the Gulf of Mexico.
Brent crude added 50 cents to 84.41 dollars a barrel, while US crude firmed 41 cents to 74.70 dollars.