Treasuries began the week on the backfoot as merchants scaled again bets on Federal Reserve interest-rate cuts following Friday’s blowout US employment report.

Yields on benchmark 10-year bonds rose as a lot as 4 foundation factors on Monday to 4.80%, the very best degree since November 2023. Yields on 30-year debt additionally picked as much as close to 5% after breaching that degree on Friday for the primary time in additional than a yr.

The selloff is being spurred by jitters round persistent inflation pressures and ballooning authorities debt ranges, main cash markets to cut back bets on US fee cuts to lower than one transfer this yr. That is rippling throughout world markets, with a gauge of the greenback surging to a two-year excessive and European bonds beneath stress.

“The big question for the market now is whether the Fed really needs to cut at all this year,” mentioned Chris Turner, head of foreign-exchange technique at ING. “Dollar strength and firm US yields are pressure-testing the financial system.”

Markets got additional proof of the resilience of the US financial system on Friday as non-farm payrolls elevated 256 000 in December, essentially the most since March and above all however one forecast in a Bloomberg survey of economists.

The shift in Fed expectations is buoying the dollar, with the Bloomberg Dollar Spot Index rising to the very best degree since November 2022 on Monday. That’s helped ship the pound tumbling to its lowest in over a yr, as UK belongings stay on the epicentre of the worldwide repricing, whereas the offshore yuan has plunged near a document low.

Traders at the moment are questioning how a lot greater US yields can go, with some even pondering the potential for Fed fee hikes. Attention will flip to producer-price knowledge on Tuesday after which consumer-price figures Wednesday, to additional gauge the outlook for financial coverage.

“Inflation is really that key data point this week,” mentioned Laura Cooper, world funding strategist at Nuveen, on Bloomberg TV. “For the market narrative, the risk is that it shifts to rate hikes.”

© 2025 Bloomberg

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