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Morning Edition · Saturday, November 14, 2026Published at 12:15 AM EST · New York
US Treasuries post their worst week since April 2025 as hot inflation locks in a December Fed hike
The 10-year yield rose about 0.3 percentage point to roughly 5.16%, futures now fully price a quarter-point increase next month, and one Fed governor has raised the possibility of a half point.
US government bonds had their worst week since President Donald Trump's "liberation day" tariff shock in April 2025. The Financial Times reported that higher-than-expected inflation and hawkish remarks from Federal Reserve officials hurt investors who had bet a global bond rout was over. The 10-year yield ended Friday near 5.16%, about 0.3 percentage point higher on the week. Another tally put it at 5.17%, a gain of about 31 basis points.
Tuesday's consumer price report started the selling. It showed prices rising 0.4% in October, and producer prices then accelerated to an annual 6.5% from 6.3% in September, according to the same report. Markets now fully price a quarter-point increase at the Fed's December meeting. Christopher Waller, a Fed governor, raised the possibility of a half-point move. Bloomberg's account, carried by American Banker, described investors who had bought bonds again after a September sell-off and were forced out as prices fell. The Fed raised rates in September for the first time in three years.
Energy is the link between the war and the bond market. Investing.com tied the rise in hike expectations to oil near $96 a barrel, and that same repricing pushed gold toward a 13-month low. The sell-off spread abroad: euro zone yields rose to multi-week highs as the hawkish Fed ended a global bond rally.
Equities held up better than bonds. On Friday the S&P 500 fell 0.4% to 7,561.67, the Nasdaq Composite fell 0.91% to 25,136.27, and the Dow Jones Industrial Average rose 0.1% to 52,347.55, the Globe and Mail reported. All three indexes still gained for the week. The divergence matters. Investors are selling long-dated bonds, which carry the most inflation and fiscal risk, faster than they are selling stocks.
Viewed through an Austrian lens, the Fed is raising its policy rate in response to price increases that come partly from a supply shock (war-related energy costs) and partly from years of credit expansion that kept long-term borrowing costs below what savers would accept. The bond market is now charging the higher price. Each rise in yields also raises the Treasury's interest bill, so fiscal pressure and monetary policy grow harder to separate.
Part of a tracked trend
Renewed Fed Tightening Fears Rattle Global Markets
Over the next 3-6 months stronger US data revives expectations of Fed rate hikes, driving a firmer dollar, equity selloffs in export-heavy markets, and pressure on hard assets as the IMF warns of recurring economic shocks.
What this means
The pressure works through real interest rates. A 10-year yield above 5% with a hike fully priced raises the cost of holding anything that pays no yield, such as gold or unprofitable growth stocks. It also raises refinancing costs for indebted borrowers, from the US Treasury to dollar-funded emerging-market companies. A December quarter point is already in prices. What is not priced is a half point, or a run of further increases into early 2027. The consensus treats this as a Fed story. The desk's view is that the long end is also repricing government bond supply and persistent inflation, and short-rate hikes do not remove either. In 1994 a series of Fed increases set off a global bond sell-off that lasted most of the year. The likelier outcome is that the 10-year yield stays above 5% through the December meeting and rate-sensitive assets stay under pressure for several weeks. That depends on oil holding in the mid-$90s. The read would be wrong if the November inflation data cool clearly or if a US-Iran settlement brings a sharp fall in crude.
What to watch
- Watch the November consumer price report due in December. A second monthly reading near 0.4% would make a larger or repeated Fed increase more likely.
- Watch whether other Fed officials join Waller in discussing a half-point move. That would show the committee's center shifting, not one governor's view.
- Watch demand at upcoming Treasury auctions of long-dated debt. Weak bidding would show that buyers want more yield to hold US duration, apart from Fed policy.
Observations to monitor, not financial advice.
Synthesized from: Financial Times Markets · Investing.com Commodities · American Banker (Bloomberg) · Economies.com
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Comments
1Nov 14, 5:15 AM
A 0.4% monthly CPI print annualizes to about 4.9%, which leaves the 10 year yield near 5.16% only about 25 basis points above that inflation run rate.