The 10-year U.S. Treasury yield increases on the final trading day of 2024, surpassing 4.5% for the year.

On Tuesday, the 10-year U.S. Treasury yield increased, marking the end of a year in which the benchmark yield climbed despite the Federal Reserve lowering short-term rates.

On Wednesday, the 10-year Treasury yield increased by approximately 3 basis points to 4.57%, reversing its decline from Tuesday morning. Meanwhile, the 2-year Treasury yield decreased by 1 basis point to 4.24%.

Prices and yields move in opposite directions, with one basis point equal to 0.01%.

Monday's decline in long-term rates was partially offset by Tuesday's move in the 10-year Treasury yield, which hit a multimonth high last week after rising distinctly across the last three months of the year.

The 10-year Treasury yield has had a volatile year, jumping from below 3.9% in January to 4.7% in the spring, then falling to below 3.7% in September before rising again.

Despite conflicting economic data and changing rate outlooks, the U.S. economy has shown surprising strength, but inflation remains above 2%. The Fed initially cut rates in September, but traders have now scaled back their expectations for further reductions in 2025.

Although the rate cuts have resulted in lower short-term yields, long-term yields are still higher on the year. This means that the yield curve is no longer inverted, but the moves have negatively impacted many investors' performance and kept mortgage rates elevated. The total return of the fund is less than 2% this year, while many funds focused on long-term debt will finish 2024 with negative returns.

"According to Tom Tzitzouris, Strategas' head of fixed income research, this year has been challenging for the bond market, with both bears and bulls making incorrect predictions several times. He made this statement on CNBC's "Squawk Box.""

The Federal Reserve lowered its benchmark interest rate by 25 basis points earlier this month, but fed funds futures price indicates that traders anticipate a pause at the January meeting. According to the CME FedWatch tool, traders believe the most probable outcome for 2025 is two additional rate cuts, resulting in a fed funds rate target range of 3.75% to 4.00%.

New Year's Day observance caused bond markets to close early on Tuesday and remain shut on Wednesday.