By Akane Otani 

U.S. Treasury yields wobbled but wound up higher Wednesday, after Federal Reserve minutes showed officials believe that economic strength justifies continued interest-rate increases.

The yield on the benchmark 10-year U.S. Treasury note settled at 3.178%, compared with 3.158% Tuesday.

Yields, which rise as bond prices fall, slipped overnight and held on to declines after data showed U.S. housing starts fell more than expected in September, adding to what has been a streak of disappointing data for the housing sector.

Weak economic data can spur demand for Treasurys and other so-called haven assets, sending yields lower.

Yet as U.S. stocks pared their losses around midday, bond yields bounced off their lows, remaining higher for the day after the Fed released minutes from its Sept. 25-26 meeting.

Officials had voted unanimously at that meeting to raise short-term interest rates by a quarter percentage point. The Fed's minutes showed that, while most officials believe the central bank will have to raise rates once more in 2018 and around three times in 2019, they are less in agreement about how far interest rates will have to rise to reach a so-called neutral level -- the point at which rates neither drive up nor stall economic growth.

Comments from Fed Chairman Jerome Powell earlier in the month indicating he believed the economy was still "a long way from neutral" jolted the bond market a few weeks ago.

"There was a sense before that the Fed was going to be really cautious about things as they move through the cycle...then we had the strong employment data and I think it was like, 'Oh, maybe not,'" said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research.

That being said, bond-market volatility appears to have wound down since the start of the month. Barring a surprise jump in inflation, "we anticipate [yields] will be relatively contained," Ms. Jones said.

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

(END) Dow Jones Newswires

October 17, 2018 15:54 ET (19:54 GMT)