10-Year Treasury Yield Back Above 5%, Up 26 Basis Points in a Week, as Rate-Hike Bets Build for Dec. 9 Fed Meeting

Since the Nov. 5 stock rout pushed the 10-year Treasury yield down to about 4.84%, bonds have given back all of that move and more. The 10-year stood at 5.12% on Friday, up 26 basis points on the week, according to the Financial Times. The FT said the Treasury market is on course for its biggest weekly sell-off since President Trump's April 2025 tariff announcement.

The 2-year yield, which tracks Fed expectations most closely, rose 32 basis points this week to 4.85%, per the same account.

The inflation print and the Fed speeches

October consumer prices rose 0.4% from September, above expectations, according to the FT. Core inflation, which strips out food and energy, rose 0.3% against the 0.2% economists had forecast.

The 2-year yield jumped 17 basis points on Tuesday, Nov. 10, its biggest one-day move since April 2025. The 10-year rose 10 basis points to 4.98% and briefly crossed 5%. Strategist Peter Boockvar said an auction of 10-year notes the same day drew soft demand.

Fed officials then piled on. Governor Chris Waller said in London he would consider backing a 50-basis-point hike in December if core inflation keeps printing at 0.3% or higher. "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take," he said.

Dallas Fed President Lorie Logan said in Houston the Fed needs at least two more quarter-point increases and that it may be possible to move faster this winter than it has this fall.

Iran and oil

On Thursday, Nov. 12, Trump wrote on Truth Social, "We don't need a deal with Iran." Oil rose, and the Treasury sell-off accelerated in early trade. The 2-year climbed 9 basis points to 4.814% and the 10-year rose almost 6 basis points to 5.046%, according to Tradeweb.

That reversed part of the prior week's oil slide. Brent had dropped as low as $93 a barrel on Wednesday, Nov. 4, a 21% fall from its recent peak of $118. Business Insider attributed that drop to investors betting Democratic gains in the midterms would speed an end to the U.S.-Iran war. The same oil decline helped pull yields lower on Nov. 5.

The Treasury also auctioned $25 billion of 30-year bonds on Thursday. Results were not in the material available at publication.

The pressure was global. The 10-year German Bund yield rose to 3.327% and the 10-year U.K. gilt to 5.281%. U.K. GDP grew 0.7% in the third quarter, the strongest quarter since early 2024, and traders put a 25-basis-point Bank of England hike in December at 74%, according to LSEG.

What traders now expect

The market has priced in a quarter-point Fed hike on Dec. 9, with a small chance of a half-point move, the FT reported. A week ago, CME FedWatch had a 23% chance of the Fed holding steady in December. By Tuesday it showed 91% for a quarter-point hike and 9% for a half-point. LSEG put it at 88% and 12% on Thursday.

The FT said a second consecutive hike in January is now largely priced in, up from roughly 10% a week earlier. A third cumulative hike by June is fully priced.

AllianceBernstein's global head of trading, Matt Scott, said the Treasury positions active managers built over the past two weeks, betting the global bond rout was over, have mostly been unwound in the last two to three days.

The other reading

Not everyone reads higher yields as a warning. Breitbart Business Digest argued that the early-October run to about 5.36% reflected a booming economy and rising real yields rather than investors balking at deficits. It pointed to hot inflation and record-low layoffs as reasons the Fed would stay aggressive. The same piece said the Nov. 5 yield plunge came from fears that parts of the AI-investment complex are overextended, and noted that GMO's Ben Inker and John Pease have argued demand for fresh AI capital could outstrip supply.

That AI worry was real. The Nasdaq Composite fell 3.37% for the week ended Nov. 6, and the S&P 500 fell 2.68% to 7,376, according to Epoch Times figures. On Nov. 5 alone the S&P dropped 4.38%.

The 10-year yield has swung from above 5.3% in early October to about 4.84% on Nov. 5 and back to 5.12% today. Mortgage rates and corporate borrowing costs follow that benchmark.

What could still change

The December meeting is more than three weeks away. Macquarie strategist Thierry Wizman said "enough can happen between now and then to deter the Fed from hiking at all, even though the baseline view should be a single 25 basis points hike."

He listed three possible brakes: a U.S. government shutdown, a further oil decline on hopes of a U.S.-Iran peace deal, and a deeper stock sell-off if the AI story worsens. Trump's Thursday comments cut against the second of those.

Next up are the Fed's Dec. 9 decision and the November inflation data that will come before it. Waller has tied a larger hike to core CPI staying at 0.3% or above.