NEW YORK (CNNMoney.com) - Treasury prices turned lower Wednesday, as investors continued to digest inflation comments by policymakers, and bet that the Fed will continue its monetary tightening policy.

The dollar gained against the yen the euro.

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The 10-year note fell 7/32 to 100-27/32, yielding 5.03 percent, up from 5.00 percent Tuesday.

The 30-year bond lost 14/32 to 90-28/32 to yield 5.11 percent, up from 5.08 percent in the previous session. Bond prices and yields move in opposite directions.

The five-year note fell three ticks, yielding 4.95 percent, while the two-year note slipped one tick to yield 5.02 percent.

In a session with virtually no economic data on tap, investors continued to focus on recent comments by members of the Federal Reserve, including Chairman Ben Bernanke, who have stressed the need of the central bank to remain vigilant against inflation.

Fed Bank of Atlanta President Jack Guynn echoed those sentiments when he said that inflation risks were elevated and that the central bank must remain flexible with rates. (Full story)

Bond traders fear inflation since it erodes the value of the fixed-income investment.

"First people got excited that the economy is slowing down, but then they heard Fed officials saying that inflation was a near-term problem we have to deal with," Thomas Atteberry, portfolio manager at Los Angeles-based First Pacific Advisors told Reuters. "That got people thinking that at end of the month they'd see a 5.25 percent federal funds rate."

The Fed is scheduled to meet again at the end of June to determine whether it will raise interest rates again from its current level of 5 percent. In light of Bernanke's recent comments, many expect the central bank to raise rates to 5.25 percent.

Bond traders largely overlooked a report published Wednesday by the Mortgage Bankers Association that the number of people applying for home loans fell last week. (Full story)

In currency trading, the dollar jumped on increased expectations about Fed rate hikes.

The euro bought $1.2794, down from $1.2825 late Tuesday. The dollar traded at ¥113.36, up from ¥113.30 in the previous session.

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Yields throw the Fed a curve - click here.