EconomyUnited States

Bond yields climb as traders bet on more Fed rate hikes

Bond yields rose and the dollar climbed further as traders bet on more Fed rate hikes. Goldman Sachs expects two more hikes before any cuts, a move that means higher borrowing costs.

Illustration: The columned stone front of a central bank building with wide steps, carved in black lines with one emerald accent, seen from far away.
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Traders are betting that the Federal Reserve, the US central bank, will raise interest rates further to pull inflation down. Bond yields posted their biggest surge since 2022, and a bond yield is the return an investor earns on a bond, which moves opposite to the bond's price. The dollar extended its gains as these bets firmed.

Goldman Sachs expects the Fed to raise rates two more times before it starts cutting them, while growth in 2027 edges up. Some investors warned that the bond sell-off is not finished after a week of soaring yields.

In numbers

2More Fed hikes Goldman expects
2%Fed inflation objective

Kelsey Berro, fixed income portfolio manager at JPMorgan Asset Management, discussed a December Fed hike that markets have already built into prices. Traders are preparing for the central bank to step up the pace of its rate increases.

US 10-year Treasury yield5.15%down −0.69%over 1 month
5.19%4.84%14 Oct13 Nov

Prices can be delayed by 15 minutes or more. Past moves say nothing about future ones.

Also in this story

Dollar indexup +0.84%1 month

Mary Daly, who serves as president of the Federal Reserve Bank of San Francisco, stated that more rate hikes are probably necessary to lower inflation. She pointed out that companies are giving more thought to raising what they charge.

Beth Hammack, president of the Federal Reserve Bank of Cleveland, said she expects the Fed to move to a restrictive stance on policy. She has repeated that higher rates are needed to combat inflation, which she linked to demand pressures from investment in artificial intelligence.

GuideWhen is the next Fed meeting? The date and what futures price

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US 10-year Treasury yield, Dollar index

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