Long-dated U.S. Treasury yields rose sharply on Monday, with the 10-year benchmark US10Y hitting 4.82%, defying expectations of a Federal Reserve rate cut. The move signals growing investor skepticism about the pace and impact of monetary easing, particularly as the market assesses the Fed’s next steps in a tightening environment.
- US10Y yield reached 4.82% on December 8, 2025, up 10 bps in two days
- 30-year Treasury yield hit 5.01%, reflecting elevated long-term inflation expectations
- TLT declined 1.4%, IEF dropped 0.9% as bond prices fell
- S&P 500 (SPX) fell 0.6% amid rate-sensitive sectors under pressure
- Real Estate (XLRE) and Utilities (XLU) each lost over 1.2%
- Market pricing suggests limited confidence in Fed’s ability to meaningfully ease monetary policy
Treasury yields surged across the curve as investors reacted to a wave of pessimism surrounding the Federal Reserve’s upcoming rate decision. The 10-year U.S. Treasury yield (US10Y) climbed to 4.82%, its highest level since early November, while the 30-year bond yield reached 5.01%. This upward pressure occurred despite widespread consensus for a 25-basis-point rate cut at the December 10-11 Fed meeting, indicating that markets are pricing in limited future easing. The shift reflects a perceived 'disappointment phase' in the Fed’s rate-cutting cycle, where investors believe that even if cuts are implemented, they may not be sufficient to counter persistent inflation or stimulate growth. The iShares 20+ Year Treasury Bond ETF (TLT) fell 1.4% on the day, marking its steepest decline in three weeks, while the iShares 7-10 Year Treasury Bond ETF (IEF) dropped 0.9%. These moves highlight growing concern among fixed income investors about rising real yields and the sustainability of current valuations. Equity markets also felt the ripple effects. The S&P 500 (SPX) dipped 0.6% by midday, with sectors sensitive to interest rates—particularly Real Estate (XLRE) and Utilities (XLU)—underperforming. Both sectors saw losses exceeding 1.2%, as higher bond yields increase the discount rate used in valuation models and make dividend-paying stocks less attractive relative to fixed income. The bond market’s reaction suggests that the Fed’s window for aggressive easing may be narrowing, even as inflation remains above target. A yield increase of over 10 basis points in just 48 hours underscores the fragility of market confidence, raising borrowing costs for the U.S. government and potentially constraining fiscal flexibility.