Technology stocks advanced, prompting investors to move away from safe-haven assets, leading to declines in U.S. Treasury prices and a simultaneous drop in the U.S. dollar. Nasdaq futures rose 0.2%, extending the tech-heavy index's 1% gain from Tuesday. After weeks of volatility, concerns about the disruptive impact of artificial intelligence have eased. The yield on the 10-year U.S. Treasury note increased by two basis points to 4.05%. Meanwhile, the U.S. dollar and the Japanese yen underperformed against most major currencies.

The revival in risk appetite has also caused money markets to scale back bets on Federal Reserve interest rate cuts, adding pressure to the bond market. Evelyne Gomez-Lichty, a strategist at Mizuho International, noted, "With the 10-year yield so close to the psychological 4% level, I think any buying would present a valuable opportunity for counter-trend selling." Swap contracts tied to Fed policy meeting dates indicate that the probability of a 25-basis-point rate cut by June has fallen to 50%, the lowest level this year. The likelihood of a third rate cut by year-end has nearly vanished.

Traders are focusing on remarks scheduled from three Fed policymakers later on Wednesday. Thomas Barkin, Jeffrey Schmid, and Alberto Musalem all hold slightly hawkish views on monetary policy, though none have a vote on policy this year. Bond demand will face a test. Following Tuesday's solid two-year note auction, the U.S. Treasury will sell $70 billion in new five-year notes at 1 p.m. New York time. Subsequently, market attention will turn to NVIDIA's latest quarterly earnings, due after the market closes on Wednesday. Investors are awaiting fresh evidence that the AI spending boom remains on track.