Treasury yields rise as investors assess likelihood of continued Fed tightening

U.S. Treasury yields rose Monday as investors weighed the likelihood that the Federal Reserve will continue hiking rates until a recession hits.

The yield on the benchmark 10-year Treasury was last up by about 9 basis points to 3.589%. The 2-year Treasury yield climbed 12 basis points to 4.40%.

Yields and prices have an inverted relationship, with on basis point equalling 0.01%.


The move in yields came as a higher-than-expected ISM report for November indicated an acceleration in growth from October's reading of 54.4. Signs of a resilient economy could signal a more aggressive Fed is needed to tamp down inflation.

Markets also continued to assess last week's nonfarm payrolls data, which showed that the U.S. economy added more jobs than expected in November. Average hourly earnings also rose more than economists had anticipated.

Tightness in the labor market has historically been closely linked to high levels of inflation. The Federal Reserve has been trying to push back against rising prices, which has led to four consecutive hikes of 75 basis points so far this year.

Investors are also looking ahead to next week's Federal Reserve December policy meeting, where the central bank is widely expected to hike rates by 50 basis points.