FX.co ★ Treasury Yields Rise Sharply

On the first trading day of December, the yield on the US 10-year Treasury note saw a substantial increase of nearly 7 basis points, reaching 4.08%, marking its highest level in approximately two weeks. This rise came on the heels of a recovery from Friday's abbreviated session, as a sell-off in Japanese debt reverberated through global bond markets. The yield on Japan's 10-year government bond surged to its highest point since 2006, amid anticipations of an imminent rate hike by the Bank of Japan. Such an increase in Japanese rates could prompt domestic investors to favor local bonds over higher-yielding foreign assets, such as US Treasuries. Additionally, a surge in new corporate bond issuances, including those from Merck & Co, applied further pressure on the bond market. Concurrently, market trends suggest an 87% probability of another 25 basis point reduction in the federal funds rate during next week's Federal Reserve meeting. In terms of economic indicators, the ISM Manufacturing PMI revealed that the US manufacturing sector continued its contraction for the ninth consecutive month in November, with the pace of decline accelerating.