U.S. Treasury yields opened the holiday-shortened week slightly higher after bonds notched their first weekly gain since late November. Early Monday, the 10-year yield was 4.1647%, up about 1 basis point on the day, while the 2-year sat at 3.4898%, and the 30-year rose to 4.8435% as duration sold off modestly.
The near-term catalyst is supply. The Treasury is running a tight sequence of auctions into Christmas: a $69 billion 2-year sale Monday, a $70 billion 5-year Tuesday, and a $44 billion 7-year Wednesday. With liquidity thinning, auction tails and bid-to-cover ratios can move yields more than usual.
Macro expectations remain the other driver. A recent inflation print showing CPI at 2.7% has reinforced the view that disinflation is grinding on, even as Fed speakers keep warning about stickiness. Cleveland Fed President Beth Hammack argued rates should be held steady for months, emphasizing inflation risks over labor softness.
- Global rates are also in play. Treasury selling tracked a jump in Japanese yields after the Bank of Japan raised rates, raising the odds of further tightening and reducing the relative appeal of U.S. duration.
- The next macro test is growth. Traders are waiting for a delayed first estimate of Q3 GDP, which could swing rate-cut pricing if it surprises meaningfully weaker or stronger.
Positioning into year-end looks less about conviction and more about avoiding being offsides. Use the auctions and the GDP print as a quick read on whether the market still wants to extend duration into 2026.
