Treasurys

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.

Treasuries sold off, with two-year yields hitting the highest since before the December central bank "pivot." Swap traders ratcheted down their expectations for a Fed cut before July.

Indeed, investors are also positioning for Friday's consumer-price index revisions because of what happened a year ago: the update was significant enough to cast doubt on overall inflation progress.

Yields across the maturity spectrum climbed as much as 10 basis points on the day, reaching session highs after the ISM gauge of service-sector activity for January exceeded economist estimates.

The Treasury Department is expected on Wednesday to follow through on its November guidance of a third round of increases in its so-called quarterly refunding auctions of notes and bonds.

Truist sold $3.5 billion of bonds in two parts. The longest portion, an 11-year fixed-to-floating rate security, yields 162 basis points above comparable Treasuries.

Investors are pricing in more than a 50% chance the Fed will lower borrowing costs in March, and expect the central bank's benchmark rate will fall to around 4% by the end of 2024.

Yields dropped across the US curve after data showed job openings fell to the lowest level since March 2021. Concerns about investors being too fast in anticipating policy easing have resurfaced.