Bloomberg <\/p>\n
(Bloomberg) — Treasuries closed out their worst week in eight months as conflicting economic data challenged expectations for how much the Federal Reserve might cut interest rates next year.<\/p>\n
US 10- and 30-year yields rose four basis points on Friday to finish a week in which they spiked the most since April, when havoc erupted in global financial markets after the US administration rolled out its tariffs agenda.<\/p>\n
Most Read from Bloomberg<\/p>\n
While traders widely expect the Fed to cut interest rates next week, jitters have emerged over expectations for additional cuts next year amid mixed signals on the health of the US labor market.<\/p>\n
\u201cExpectations have been adjusted in a more hawkish direction for the Fed,\u201d said Steven Zeng, an interest-rate strategist at Deutsche Bank. \u201cInvestors are growing skeptical of more rate cuts next year.\u201d<\/p>\n
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A much bigger selloff in Canadian government bonds Friday, sparked by stronger-than-expected employment data, was a factor. But US yields had already risen to weekly highs.<\/p>\n
The US 10- and 30-year yields climbed more than 12 basis points since Nov. 28, with the 10-year closing at 4.14%.<\/p>\n
The move held after the delayed release of September personal income and spending data \u2014 which includes the inflation gauge the Fed aims to keep around 2% \u2014 showed that it accelerated to 2.8%, as economists estimated. Several Fed policymakers have said the inflation trend should forestall rate cuts.<\/p>\n
WATCH: On \u201cBloomberg Real Yield\u201d, Stephanie Roth, chief economist from Wolfe Research, speaks to Scarlet Fu about the US economy. Source: Bloomberg <\/p>\n
US administration comments this week about the potential for changes in Fed leadership \u2014 beyond its plans for a successor to Chair Jerome Powell, whose term ends in May \u2014 \u201chave reinvigorated uncertainty, which is reflected in the price action,\u201d said Dhiraj Narula, an interest-rate strategist at HSBC Securities. Treasury Secretary Scott Bessent this week said long-term residency in the district should be an eligibility requirement for regional bank presidents.<\/p>\n
The market for long-maturity interest rates in particular \u201cdoesn\u2019t like uncertainty around what the potential path for policy might be,\u201d Narula said. \u201cWhen policy uncertainty goes up, investors need larger premiums to sit in longer tenors.\u201d<\/p>\n
Treasuries sustained losses despite heavy buying of five- and 10-year note futures contracts via at least eight block trades. Five were either 20,000 or 25,000 lots, and the largest was a 45,000 parcel.<\/p>\n
What Bloomberg Strategists say…<\/p>\n
\u201cYields pushed higher even as the Fed\u2019s favored inflation gauge, core PCE, came in line with consensus and University of Michigan inflation expectations were lower than forecast. The move likely reflects caution ahead of the coupon supply kicking off Monday with $39 billion in three-year notes.\u201d<\/p>\n
\u2014Alyce Andres, Macro Strategist, Markets Live<\/p>\n
For the full analysis, click here.<\/p>\n
Treasury Auctions<\/p>\n
Next week\u2019s auctions of three-, 10- and 30-year government debt are slated to begin Monday, a day earlier than usual to avoid coinciding with the Dec. 10 Fed announcements. Besides the rate decision, those will include policymakers\u2019 quarterly summary of economic projections. Fed governors and regional bank presidents anonymously indicate their expectations for key indicators and interest rates over the next several years.<\/p>\n
\u201cMarkets are probably looking ahead to the bond auctions and waiting for the December FOMC to hint at future direction,\u201d said Evelyne Gomez-Liechti, a strategist at Mizuho International Plc.<\/p>\n
Furthermore, next week is anticipated to bring most of the last of this year\u2019s investment-grade corporate bond supply, concentrated on Monday and Tuesday ahead of the Fed.<\/p>\n
The bulk of this week\u2019s move in yields came on Monday, fueled by a deluge of corporate debt sales and a warning of potential rate hikes from Bank of Japan Governor Kazuo Ueda. Any signal that the BOJ might tighten policy can ripple across global bond markets, pushing yields higher elsewhere.<\/p>\n
–With assistance from James Hirai and Laura Avetisyan.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Bloomberg (Bloomberg) — Treasuries closed out their worst week in eight months as conflicting economic data challenged expectations…\n","protected":false},"author":3,"featured_media":427345,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[3638,64,26491,198870,198869,267,74053,67,132,68],"class_list":{"0":"post-427344","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bloomberg","9":"tag-business","10":"tag-deutsche-bank","11":"tag-dhiraj-narula","12":"tag-global-financial-markets","13":"tag-interest-rates","14":"tag-the-federal-reserve","15":"tag-united-states","16":"tag-unitedstates","17":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115669122622360614","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/427344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=427344"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/427344\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/427345"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=427344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=427344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=427344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}