(Bloomberg) — Treasuries fell as investors ramped up bets that the Federal Reserve will need to raise interest rates, while tensions in the Middle East added to inflation concerns.<\/p>\n
Most Read from Bloomberg<\/p>\n
Yields rose as much as two basis points across the curve, with the biggest moves in the five-year sector which is one of the tenors more sensitive to changes in Fed policy expectations.<\/p>\n
Investors are still assessing the strong US jobs report on Friday, which topped all forecasts and reaffirmed the view that the Fed, under Chairman Kevin Warsh, will need to raise borrowing costs to contain inflation that is running above target.<\/p>\n
Meanwhile, President Donald Trump said Israel and Iran are \u201clooking to do\u201d an immediate ceasefire after earlier urging both to swiftly halt their attacks on each other. Oil prices rose, potentially adding to inflationary pressures in the world\u2019s largest economy.<\/p>\n
Traders have returned to pricing in a quarter-point Fed hike by December and around a 20% chance of a second increase. Last Thursday, markets were betting that March 2027 would be the earliest timing for a quarter-point hike.<\/p>\n
\u201cResilience in the labor market makes it easier for a central bank to defend tighter policy warranted by higher inflation,\u201d said Abbas Keshvani, director of Asia macro strategy at RBC Capital Markets in Singapore.<\/p>\n
Yields on two and five-year Treasuries have risen more than 80 basis points since this year\u2019s lows in March to 4.16% and 4.29% respectively. Those on benchmark 10-year debt have risen more than 60 basis points to 4.55%.<\/p>\n
Goldman Sachs Group Inc. economists say they no longer expect the Fed to cut interest rates this year due to a stronger-than-expected labor market. BNP Paribas analysts now forecast three quarter-point rate hikes starting in December, having previously expected the US central bank to keep interest rates steady in a 3.5% to 3.75% range this year. JPMorgan Chase & Co. sees 10-year yields ending the year higher at 4.70%.<\/p>\n
Traders are also wagering that inflation figures this week will show the biggest surge in consumer prices in several years, adding to the case for higher rates.<\/p>\n
What Bloomberg Strategists Say…<\/p>\n
Benchmark US 10-year yields at 4.57% are likely to climb further this week unless Wednesday\u2019s US CPI data comes in surprisingly weak.<\/p>\n
\u2014 Garfield Reynolds, Markets Live Strategist<\/p>\n
President Donald Trump, in an interview with NBC\u2019s Meet the Press, sought to push back against market expectations for higher interest rates, saying there is \u201cno reason\u201d for the Fed to hike. Raising the benchmark rate \u201cis the wrong thing to do,\u201d Trump said. \u201cWe should actually lower interest rates.\u201d<\/p>\n
Warsh faces his first Federal Open Market Committee meeting on June 16-17. There are expectations that officials will drop the so-called easing bias from their policy statement.<\/p>\n
\u201c Recent positive job gains, a low unemployment rate, and elevated inflation significantly increase the likelihood that the Fed will raise interest rates this year,\u201d Jason Schenker, president and chief economist at Prestige Economics LLC, wrote in a note.<\/p>\n
Bonds elsewhere also weakened. German and UK 10-year yields rose one basis point to 3.05% and three basis points to 4.93% respectively. Japan\u2019s 10-year equivalent jumped six basis points to 2.73%.<\/p>\n
–With assistance from James Hirai.<\/p>\n
(Updates throughout)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Treasuries fell as investors ramped up bets that the Federal Reserve will need to raise interest…\n","protected":false},"author":2,"featured_media":691669,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[2213,7904,28,101,9007,45588,942,300082,43743],"class_list":["post-691668","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-basis-points","tag-bloomberg","tag-business","tag-economy","tag-interest-rates","tag-kevin-warsh","tag-president-donald-trump","tag-quarter-point","tag-the-federal-reserve"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/691668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=691668"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/691668\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/691669"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=691668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=691668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=691668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}