U.S. Treasury markets sold off sharply after December’s unexpectedly strong employment report prompted investors to rethink expectations for Federal Reserve policy. The 30-year Treasury yield climbed above 5% for the first time in more than a year, while yields across shorter maturities rose by more than 10 basis points. Traders are now pricing in fewer rate cuts and have pushed back the likely timing of the Fed’s first reduction from June to September. Since the Fed began cutting rates in September, yields have risen by roughly 100 basis points, suggesting that financial conditions may be looser than the Fed previously believed.
