The 10-year yield reaches a 3-year high as the Fed considers accelerating its policy tightening.

On Wednesday, the 10-year Treasury yields reached a three-year high, coinciding with the Federal Reserve's announcement of their plans to reduce their trillions in bond holdings.

The benchmark rate traded 6 basis points higher around 2.6%, near its highest level since March 2019, as it stages a two-day jump. The 10-year closed Monday at around 2.4%. Yields move inversely to prices, and 1 basis point is equal to 0.01%.

Officials announced plans to reduce their trillions in bond holdings at their March meeting, with a consensus amount around $95 billion, as shown in the Fed meeting minutes released on Wednesday.

One or more 50-basis-point interest rate hikes could be necessary to combat rising inflation, according to policymakers.

The minutes stated that due to inflation exceeding the committee's target, inflationary risks, and the federal funds rate being below participants' long-term estimates, many participants preferred a 50 basis point increase in the federal funds rate target range at this meeting.

On Wednesday, the 10-year yield surpassed the 2-year yield, which had been trading at 2.47%. This move triggered a yield curve inversion, as the 2-year had previously been trading above the 10-year.

The yield on the moved 1 basis point lower to 2.682%, while the rose 3 basis points to 2.61%. Yields move inversely to prices, and 1 basis point is equal to 0.01%.

Federal Reserve Governor Lael Brainard, who typically supports easy policy and low rates, stated that the central bank must act swiftly to reduce inflation.

She stated on Tuesday that inflation is excessively high and poses an upward risk. The committee is prepared to take more decisive action if inflation indicators and expectations suggest it is necessary.

— CNBC’s Vicky McKeever contributed to this market report.