It is turning out to be a bloodbath for bonds today.
-- The yield on the 2-year Treasury note, which is particularly sensitive to the near-term outlook for interest rates set by the Federal Reserve, was recently up 0.19 percentage point-on pace for its biggest one-day jump since April 2025.
-- The 10-year yield was up around 0.13 percentage point at 4.988%, threatening to climb back to 5% for the first time since late October. Yields rise when bond prices fall.
Tuesday's selloff-spurred by hot inflation data and hawkish comments from a key Fed official-breaks a period of calm for the bond market, which had benefited by a recent selloff in tech stocks and drop in oil prices, both of which had caused traders to scale back bets on interest-rate hikes by the Fed.
Now, investors are not only convinced that the central bank will raise rates next month, they also see a roughly 15% chance that the central bank could lift rates by 0.5 percentage point-a bigger move than the typical 0.25 percentage-point increase.
Short and long-term Treasury yields still are well off their 2026 highs, with the 10-year yield having climbed above 5.3% in early October.
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