Bond traders all but wiped out their bets that the Federal Reserve would cut interest rates later this month after the unemployment rate for December fell more than expected.
A resulting selloff in short-maturity Treasuries — more sensitive than long-maturity tenors to Fed rate changes — lifted the two-year note’s yield by nearly five basis points to the highest level this year. Bond traders maintained an outlook for two rate cuts overall in 2026, with the first seen by mid-year.
“I didn’t think January was on the table; it definitely is not now,” said