US Treasuries Fall on Strong Jobs Data, Fed Rate Hike Expectations Shift to 2026

US Treasury bonds declined following stronger-than-expected employment data. Markets increased bets that a robust labor market could delay Federal Reserve rate cuts and even lead to a rate hike in 2026. This pushed bond prices lower while yields rose. The released data showed the economy heating up faster than anticipated, with the unemployment rate remaining low. Investors assess that this scenario could cause the Fed to maintain its tight monetary policy for longer. Notably, 2026-dated Fed fund futures are pricing in the possibility of a rate hike. Selling pressure in the bond market led to higher yields on both short- and long-term Treasuries. The yield on the 10-year Treasury note jumped significantly after the data release. Market participants note increased uncertainty regarding the Fed's next move and expect a data-dependent path. Analysts suggest that strong employment figures could delay the timing of the Fed's rate-cutting cycle, and if inflationary pressures persist, the option of a rate hike may remain on the table. This has also caused volatility in equity markets, while the dollar index showed a strengthening trend. This is not investment advice.