U.S. Treasury Yields Surge Amid Inflation Concerns, 10-Year Note Tops 4.8%

U.S. Treasury yields surged on January 8, 2026, as investor sentiment turned cautious amid fresh economic data suggesting inflation pressures remain entrenched. The benchmark 10-year Treasury note yield climbed to 4.81%, up 12 basis points from the previous session and marking its highest level since July 2023. Meanwhile, the 30-year bond yield rose to 4.97%, reflecting heightened demand for long-duration debt in a rising rate environment. The rally in yields follows a stronger-than-expected December jobs report, which showed nonfarm payrolls increased by 245,000 and the unemployment rate held steady at 4.1%. Wage growth accelerated to a 3.9% year-over-year pace, exceeding forecasts and reinforcing concerns that the Federal Reserve may extend its high-interest-rate policy longer than previously anticipated. Core inflation data for December also came in at 3.2% annually, unchanged from November and above the Fed’s 2% target. Financial markets reacted swiftly, with the S&P 500 dropping 1.2% and the Nasdaq Composite shedding 1.6%. Bond funds saw outflows totaling $1.8 billion over the past five days, while the 2-year Treasury yield jumped to 4.65%, reflecting tighter near-term rate expectations. The U.S. dollar index strengthened to 106.3, its highest since November 2024, as investors priced in higher yields abroad. Market participants are now pricing in a 68% probability of a rate hold in March 2026, up from 52% a week earlier. However, the odds of a 25-basis-point hike by June remain at 41%, indicating continued uncertainty around the Fed’s pivot path. Treasury issuance plans for the first quarter of 2026, including a planned $75 billion auction of 10-year notes on January 15, are expected to add upward pressure on yields if demand remains subdued.