NEW YORK (CNNfn) - Treasury bonds faltered Wednesday, but trimmed some earlier losses after the Federal Reserve kept interest rates steady, in line with expectations.
In the currency markets, the dollar edged higher against both the euro and the yen.
Shortly after 3 p.m. ET, the 10-year Treasury note, considered the market benchmark, fell 3/32 of a point in price to 102-27/32. The yield, which moves inversely to price, rose to 6.10 percent from 6.09 percent Tuesday.
The 30-year bond retreated 12/32 to 103-30/32, its yield rising to 5.96  percent from 5.93 percent.
The Federal Open Market Committee, the Fed's policy-making arm, kept the federal funds rate -- the rate banks charge each other for borrowing money -- at 6.5 percent, concluding a two-day meeting.
The results were widely anticipated due to recent economic data pointing to a slowdown in the economy. But the Fed still warned inflation risks remain.
Market participants said investors were cautious, and upcoming economic news will be highly scrutinized for clues regarding interest rates in the months ahead.
"We still need to keep the inflation pressures from building or there will be a problem in the future," said Josh Stiles, senior bond strategist at  IDEAglobal.com.
In an effort to slow the economy and curb inflation, the central bank raised rates six times in the past year. Data released this week, including Wednesday's durable goods, suggest strength in the economy.
U.S. durable goods, which measure orders for big ticket items, rose 6 percent in May, compared to a revised 5.7 percent decline in April, the Commerce Department reported. Analysts surveyed by Briefing.com forecasted a 2.8 percent gain.
"We're still trading on the defensive and seeing more selling," said Michael Boss, bond futures broker at IBJ Lanston Futures in Chicago. "As it appears, this second-quarter slowdown could be a mirage."
Many analysts expect the Fed to hike rates at the next monetary policy meeting on August 22.
Also weighing the market was Germany's Deutsche Telekom AG (DT: Research, Estimates) record global debt sale. The No. 1 telecommunications firm in Europe sold more than $14 billion in securities, including a $9.5 billion U.S. dollar portion.
Corporate bonds often compete with Treasurys and their higher yields turn buyers away from government securities. Analysts said demand for this issue was very strong.
As expected, the Treasury Department said it will repurchase Thursday $2 billion in bonds with maturities between Feb. 2019 to Aug. 2023. The buyback is part of its ongoing program to retired $30 billion of some older, longer-dated maturities this year.
(Click here for a look at Briefing.com's economic calendar.)
Dollar rises vs. euro, yen
The dollar advanced slightly against both the euro and the yen Wednesday. Analysts said the Fed results had little impact in the currency markets, as the outcome was widely expected.
Bob Lynch, currency strategist at Paribas, said he expects to see the dollar slip modestly in the next couple of days against the European currencies,  but investors will need to see upcoming data in order for it to make a big directional move.
Shortly before 3 p.m. ET, the euro traded at 94.18 cents compared with 94.55 cents Tuesday, a 0.4 percent gain in the dollar's value. Meanwhile, the dollar was at 105.55 yen, up from 105.31 Tuesday. 
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