US Bonds Tumble Amid Weak Demand for 10-Year Treasuries, Fueled by Inflation and Rate Hike Fears

A US$42 billion auction of 10-year US Treasuries experienced weak demand, pushing the auction yield to 5.02%, slightly above the secondary-market level of 5.01%. This bond sell-off was driven by unexpectedly strong inflation data and increased concerns about aggressive Federal Reserve rate hikes. The 10-year Treasury yield, a key benchmark for various loans, climbed back above 5%, while the two-year Treasury yield, more sensitive to interest-rate changes, rose by 18 basis points to 4.7524%, marking its largest increase in 19 months. The selling pressure intensified after Federal Reserve Governor Christopher Waller indicated he would support a larger half-percentage-point rate increase if inflation continued to accelerate.