Treasury Selloff Pushes U.S. Yields Higher, Spreads to Europe

The two-year Treasury yield closed at 4.862%, while the 10-year yield ended at 5.102%, its largest two-day increase since April 2025. Cleveland Fed President Beth Hammack said she favors smaller, steadier policy moves to help businesses and households plan. San Francisco Fed President Mary Daly said she believes more tightening will be needed because inflation pressure extends beyond sectors most directly affected by tariffs or oil.

Existing-home sales fell in October to a 16-year low as the bond selloff pushed mortgage rates above 7%. Oil prices rose after President Trump wrote on Truth Social that “we don't need a deal with Iran,” damping hopes for a peace agreement and adding to the prospect of further Fed rate increases. LSEG data put the probability of a 25-basis-point December hike at 85%, compared with 15% for a 50-basis-point move.

In Europe, the German 10-year government bond yield closed at 3.358%, up 0.026 percentage point and its highest close since Oct. 29. The U.K. 10-year gilt yield rose 0.073 percentage point to 5.302%. U.K. gross domestic product grew 0.7% in the three months through September from the previous quarter, the strongest quarterly expansion since the first quarter of 2024 and in line with economists’ expectations, according to the country’s statistics agency.

LSEG put the probability of a Bank of England rate increase of 25 basis points in December at 74%. EFG Asset Management economist Sam Jochim said the growth figures highlighted the U.K. economy’s resilience and suggested it could withstand further monetary tightening.

The Fed’s decision is still weeks away, and Macquarie Group strategist Thierry Wizman said developments could dissuade officials from raising rates. He cited the risk of a U.S. government shutdown, a possible decline in oil prices if hopes for a U.S.-Iran deal improve, and a further stock selloff if concerns about artificial intelligence deepen. Wizman said a single 25-basis-point increase remained the baseline view, while those risks could also deter a larger move.