The 10-year bond was yielding more than 4.50%, where it had been valued earlier. Yields rise when demand falls.
News hit of a higher-than-expected 1.9% rise in the September PPI. Excluding food and energy, the index rose 0.3%, slightly ahead of consensus estimates.
Investors braced themselves for more interest rate hikes from the Federal Reserve for some time to come, as Chairman Alan Greenspan grapples with inflation.