4.77% at two years, 4.99% at ten: the bond market comes back from its holiday

On Wednesday the US cash bond market was shut for Veterans Day. The reply to Tuesday’s hot inflation figures therefore arrived on Thursday, as trading resumed in Asia. The two-year Treasury yield rose 4 basis points to 4.77%, the 10-year was little changed at 4.99% and the 30-year fell 2 basis points to 5.33%, according to Saxo¹. Bloomberg had the 30-year at 5.32% and the 10-year briefly at 4.98%².

What the shape says. A rising short end and a softer long end is what traders call a twist-flattening¹. The two-year tracks what the Federal Reserve is expected to do next; it had already jumped as much as 20 basis points on Tuesday, the biggest one-day move since April 2025¹. The longer maturities picked up a little safe-haven demand as Nvidia’s boardroom troubles rattled share futures².

The price of the next move. Traders now fully price a quarter-point Fed rise in December and assign a small chance of a half point, Bloomberg reports². Options on SOFR, the overnight rate that much US lending is priced off, traded about 80% above their 20-day average on Tuesday, with most new positions protecting against further tightening, Saxo says¹. A CIBC strategist told Bloomberg that a 50-basis-point move or faster tightening is “now real” as a discussion².

The euro’s side. The dollar held near an 18-month high². The euro was 0.2% lower at $1.1073 in Bloomberg’s snapshot; AFP had it at $1.1097 slightly earlier^2,3.

For you. Your mortgage is not priced in Washington, but the world’s benchmark borrowing costs are, and a dearer dollar makes oil and other dollar-priced imports cost more in euros. If you are fixing a loan or a deposit, the useful habit is to compare offers this week rather than wait for a headline. Nothing here is investment advice.