Treasury yields moved higher on Friday as investor expectations for a Federal Reserve rate hike in December strengthened significantly [1]. The 10-year U.S. Treasury note yield, a key benchmark for mortgages, auto loans, and credit card debt, rose 2 basis points to 5.1271%, while the 30-year Treasury bond yield increased 3 basis points to 5.4602% [1]. The 2-year Treasury note yield, which is typically more sensitive to short-term Fed decisions, was 1 basis point lower at 4.8525% [1]. These moves followed substantial gains on Thursday, when the 10-year yield jumped more than 13 basis points to exceed 5% and the 2-year yield soared more than 15 basis points [1].
Market participants have now priced in a near-certainty of a Fed rate hike at the December 9 meeting, with traders assigning 100% odds of a rate increase according to the CME Group's FedWatch tool [1]. Within that expectation, odds of a 25 basis point hike stand at almost 87%, while the probability of a 50 basis point increase is around 13% [1]. The yield curve dynamics reflect this hawkish positioning, with longer-dated yields responding more dramatically than shorter-term rates.
Energy markets showed mixed signals during the session, with oil prices choppy as geopolitical tensions eased [1]. U.S. West Texas Intermediate futures for December delivery declined 0.1% to $88.63 per barrel, while Brent crude rose 0.3% to $96.11 [1]. Looking ahead, October's producer price index—a key measure of wholesale inflation—was expected to be released later Friday, with forecasts showing 0.4% growth compared to 1.3% in September [1].
CONCLUSION
Treasury yields surged on Friday as markets fully priced in a December Fed rate hike, with 100% odds assigned to a rate increase at the December 9 meeting [1]. The sharp moves in both 10-year and 30-year yields signal investor expectations for sustained monetary tightening, which carries significant implications for borrowing costs across mortgages, auto loans, and credit products. Upcoming inflation data will be critical in confirming whether the Fed maintains its hawkish trajectory.