By Sam Goldfarb

U.S. government bonds moved in a narrow range Wednesday, with yields drifting modestly lower in light trading.

The yield on the benchmark 10-year Treasury note was recently 2.551%, according to Tradeweb, compared with 2.566% Tuesday. Yields fall when bond prices rise.

A postelection selloff in government bonds briefly gained new momentum last week when the Federal Reserve raised interest for the second time since 2006 and signaled a faster pace of increases next year.

The Fed's move was enough to push the 10-year yield to an intraday high of 2.628% last Thursday. But yields have since settled back down, as investors await new information about the economy and the course of fiscal and monetary policy out of Washington.

Absent any surprises, most investors and analysts expect a quiet end of the year for the bond market, given the lack of major economic data on the horizon or speeches from Fed officials.

A couple of technical factors could push yields lower. At the end of each month, newly minted bonds replace maturing debt in many bond indexes, and fund managers who track the indexes typically replicate the changes by buying bonds, focusing on longer-term maturities.

In addition, "people generally tend to be cautious going into year-end," leading to some extra demand for government debt, said Subadra Rajappa, head of U.S. rates strategy at Société Générale SA.

Still, any small uptick in bond prices wouldn't make up for the large declines of recent months.

Treasury yields reached record lows over the summer. Since then, however, solid data from China, the U.S.and Europe has contributed to a brightening economic outlook, and Donald Trump 's victory in the presidential election in November produced a surge of optimism, causing investors to rush out of government debt and into riskier assets such as stocks.

Investors expect President-elect Trump and a Republican-controlled Congress to increase the budget deficit by cutting taxes and boosting spending on defense and infrastructure. That could diminish the value of outstanding government debt by adding to the supply of bonds. It could also spur growth and inflation, which would erode the fixed-returns of bonds and possibly lead the Fed to raise interest rates more quickly than expected.

Not all investors and analysts are convinced that Treasury yields should have climbed as much as they have. Some argue that the economy still faces long-term structural challenges and that passing major fiscal legislation won't be easy.

Many, though, have been hesitant to buy bonds until the market settles down or there is more clarity about the situation in Washington.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

December 21, 2016 12:29 ET (17:29 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.