By Akane Otani 

U.S. government bond prices fell Wednesday as signs of progress on trade talks between Washington and Beijing spurred fresh risk-appetite across markets.

The yield on the benchmark 10-year U.S. Treasury note settled at 2.908%, up from 2.881% Tuesday.

Yields, which rise as bond prices fall, jumped with stock futures after The Wall Street Journal reported that China was planning to replace its "Made in China 2025" policy -- something that the Trump administration had criticized as being protectionist. The replacement policy, which is meant to help ease trade tensions with the U.S., would offer foreign companies greater access to China, people briefed on the matter told the Journal.

Rallies across riskier assets like stocks tend to soften demand for Treasurys, which investors consider a haven.

Earlier in the session, bond yields had held on to small advances for the day after Labor Department data showed U.S. consumer prices were flat in November as expected.

Traders have been closely watching inflation data throughout the year to gauge whether price pressures are picking up at a pace that might push the Federal Reserve to accelerate its pace of interest-rate increases. Inflation tends to damp investor demand for Treasurys since it chips away at the purchasing power of bonds' fixed payouts.

Still, data over recent weeks have generally reassured investors that inflation remains benign for now. Sliding oil prices kept the consumer-price index, which measures what Americans pay for everything from gasoline to hamburgers, unchanged in November following a seasonally adjusted 0.3% gain in October.

"It's a bit of a goldilocks read: not too hot to warrant an acceleration of rate increases, but not too cold for the Fed to hold off next week," said Mike Loewengart, vice president of investment strategy at E*Trade, in emailed comments.

While CME Group data Wednesday afternoon showed traders are pricing in a roughly 80% chance of the Fed raising interest rates at its meeting next week, the rate path for 2019 has become more murky over the past few months. The market-implied probability for at least one rate increase by March 2019 has dropped to around 32%, according to CME Group, from 53% one month ago.

"The Fed is likely to pivot in 2019 and tread with more caution on rate hikes," said Diane Swonk, chief economist at Grant Thornton, in a statement.

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

December 12, 2018 16:12 ET (21:12 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.