US Treasury Yields Soar as Services PMI Surprises with Strong Growth

The US Treasury yields rebounded on Monday as the Services PMI data came in stronger than expected, indicating resilience in the US economy. The Institute for Supply Management's Services PMI for January exceeded consensus forecasts, showing that the services sector continues to expand at a solid pace.

This robust reading reduced concerns about an imminent economic slowdown and led to a sell-off in government bonds, pushing yields higher. As of the latest trading session, the yield on the benchmark 10-year Treasury note rose to approximately 4.2%, up from its recent lows.

The stronger services data complicates the Federal Reserve's path forward. While inflation has moderated from its peaks, the resilience in economic activity gives policymakers room to keep rates higher for longer. Market participants now see a lower probability of a rate cut at the next Federal Open Market Committee meeting.