US Treasuries dropped sharply on Tuesday, November 10, 2026, as fresh data confirmed stubbornly high inflation. The market reaction cemented expectations that the Federal Reserve will hike interest rates at its December meeting. Yields on Treasuries maturing in two to five years surged by more than 10 basis points following the economic report.
Traders now see a strong likelihood of at least two rate increases by mid-2027. Some are even pricing in a slim chance of a larger-than-usual half-point move in December. The shift in expectations reflects growing concerns about inflation persisting longer than anticipated.
The sell-off in Treasuries underscores the market's sensitivity to inflation data. Investors are increasingly betting that the Fed will need to take more aggressive action to cool price pressures. The moves come as policymakers face mounting pressure to balance inflation control with economic growth.