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U.S. Treasury prices extended losses Wednesday, lifting the 10-year yield above 2.5% as investors brace for a turning point in Federal Reserve policy. In early New York trading, benchmark 10-year notes fell 11/32 in price to yield 2.540%, according to Tradeweb. That’s the highest yield since Aug. 1. The 30-year bond lost 20/32 to yield 3.266%. Two-year notes slipped 1/32 to yield 0.572%, the highest since late July. Bond yields rise when prices fall.

The Fed’s policy-setting board meets Sept. 16-17, releasing an updated policy statement and hosting a press conference with Fed Chairwoman Janet Yellen afterwards. There is growing expectation that the central bank will offer more clarity on the timing of its first rate increase since the 2008 financial crisis–a move that would weigh particularly hard on shorter-dated Treasurys.

It’s the attention “out there about the Fed hiking rates that’s got people all hot and bothered,” said David Ader, U.S. government bond strategist at CRT Capital Group. He points to the growing dialogue in the media and among market participants about whether investors’ expectations are out of sync with the Fed’s outlook on policy.

Contributing to that chatter was a research piece by the San Francisco Fed out earlier this week, suggesting that the public’s expectations for rate increases are lagging the central bank’s published outlook. An updated forecast by Fed officials will be released Sept. 17.

For now, market expectations center around a rate increase in the middle of 2015. Any hint that the move could come earlier would put pressure on shorter-dated notes, which are most tied to the outlook on monetary policy.

“We believe the danger is currently that the market swings from pricing too few rate hikes to pricing too many,” said Gennadiy Goldberg, U.S. strategist at TD Securities. The firm’s call is for the rate increase to happen in September 2015.

Adding to the pressure on Treasurys this session, the U.S. is scheduled to sell $21 billion in 10-year notes. Looming supply typically weighs on prices as investors attempt to lock in a higher yield at the auction.

Some bond traders say the 2.54% yield on U.S. 10-year Treasurys will help draw buyers since it is attractive compared to the 1.01% yield offered on comparable German debt and 0.54% on similar Japanese government bonds.

The global bond landscape has indeed been one of the factors limiting the selling pressure on U.S. Treasurys this year, even as investors worry about the Fed getting closer to tightening policy. Bond managers say there is only so far U.S. yields can rise when other safe government bonds offer even less.

Already, the 1.5-percentage-point gap between yield on U.S. and German 10-year bonds is the highest since June 1999.

“It should be overwhelmingly tempting for European and Japanese investors to buy U.S. Treasurys,” Jeffrey Gundlach, founder of DoubleLine Capital, said on a Webcast late Tuesday. He sees the U.S. 10-year Treasury yielding between 2.2% to 2.8% for the rest of the year.