Treasury yields moved higher on Wednesday as investors feared a new U.S. tax bill could worsen the country's deficit following a Moody's downgrade of the U.S. credit rating.

The 30-year Treasury bond yield was up nearly 6 basis points at 5.023%. The 10-year yield was more than 5 basis points higher at 4.533%. The 2-year yield advanced almost 3 basis points, reaching 3.996%.

One basis point is equivalent to 0.01%, and yields and prices move in opposite directions.

Investors are keeping an eye on discussions around U.S. President Donald Trump's budget bill as some Republicans said they wouldn't support the bill without larger deductions for state and local taxes. The bill could increase the U.S. government's deficit — which has become a cause for alarm in the past week.

"When it comes to the near term, all eyes are now on the tax bill that the Trump administration is seeking to pass through Congress, as the final agreement will go a long way to determining how big the US deficit becomes in the years ahead," Deutsche Bank analysts remarked in a note.

On Friday, Moody's downgraded the U.S. government's credit rating to the second-highest tier, putting it in line with all other major rating agencies, and highlighted the increasing burden of financing the government's ballooning budget deficit. That sent the 30-year Treasury yield surging past 5% on Monday, signaling the second major bond market sell-off in a month.

Bridgewater Associates founder and billionaire Ray Dalio added on Monday that the Moody's downgrade poses a greater threat to U.S. Treasurys than realized, as the credit agency isn't considering the risk of the federal government printing money to pay its debt.

"You should know that credit ratings understate credit risks because they only rate the risk of the government not paying its debt," Dalio said in a post on social media platform X.

"They don't include the greater risk that the countries in debt will print money to pay their debts thus causing holders of the bonds to suffer losses from the decreased value of the money they're getting (rather than from the decreased quantity of money they're getting)," Dalio added.