Fixed income

Treasury yields surged across the curve on Friday, while traders — as well as economists at JPMorgan Chase & Co. and Citigroup Inc. — pushed out their expectations for the Fed's first rate reduction.

The recalibration came amid the best two-day rally for short-end Treasuries since January, following the central bank's latest policy meeting on Wednesday.

Traders have built positions in options linked to the Secured Overnight Financing Rate targeting a scenario where officials keep rates steady past December's policy meeting.

Traders are no longer fully pricing in a rate cut before November, while at the start of the year, cuts beginning in March were fully priced in.

Global yields rose on Thursday as markets around the world adjusted to central banks keeping interest rates higher for longer, with the US two-year yield briefly exceeding 5% for the first time since November.

Traders ceased fully pricing in a Fed rate cut before September after the March employment report revealed that US payrolls expanded by the most in nearly a year.

Treasuries fell across the curve after data showed manufacturing unexpectedly expanded for the first time since September 2022 — while input costs climbed.

Treasuries fell across the US curve, with shorter maturities leading the way after Federal Reserve Governor Christopher Waller said he wants to see "at least a couple months of better inflation data" before cutting rates.

Treasury yields retreat from 2024 highs with month-end in view

The trend gained momentum this week, when there was strong demand for contracts wagering that 10-year yields will breach 4.5%, a level they haven't exceeded since November.