Treasury Yields Climb Amid Expectations of Faster Rate Hikes

Treasury yields continue to climb after hitting a 19-year high on Wednesday, fueled by expectations of more rate hikes from the Federal Reserve. The benchmark 10-year Treasury yield rose one basis point to 5.124%, while the 30-year Treasury bond was up over one basis point to 5.42%. The data-driven selloff in Treasuries is part of a global government bond sell-off, with Japan's 10-year JGB yield rising 8 basis points to 3.055%, its highest since August 1996.

The strong U.S. economic activity print, led by the services PMI at 58.7 and manufacturing PMI at 56.7, both of which were the highest in almost five years, drove expectations of more rate hikes. Traders now price a 70% chance that the Federal Open Market Committee will increase rates again in its October meeting, according to the CME Group's FedWatch tool.

Fed Governor Michael Barr said on Wednesday that 'further policy adjustments' are likely to bring inflation down to target. The main driver of the Treasury selloff was a strong batch of PMIs and rebounding oil prices, which led to mounting speculation about faster rate hikes.