Last Week - Largest Bond Selloff Since "Liberation Day"
Treasuries posted their largest weekly selloff since last year's "Liberation Day," as a convergence of events raised inflation risk across the curve and pushed the long bond above 5.50% for the first time since 2004. Notably, bond yields began to decouple from oil prices last week, a sign that the repricing is now being driven by domestic growth and inflation dynamics rather than by geopolitics alone. The drivers were broad. Economic data remained strong, with the Atlanta Fed's GDPNow tracking 5% growth for the third quarter. Hyperscaler capital expenditures have now exceeded, in inflation-adjusted terms, the amounts spent building the railroads and the electrical grid in U.S. history. Each of these pushed rates higher on its own; together they produced the sharpest weekly move of the year. Since Chairman Warsh's Jackson Hole speech on August 27, the 2-year Treasury is up roughly 60 bps and the 2s/30s curve has flattened by 30 bps. The strength of the data suggests the Fed may raise rates again at the October 28 FOMC meeting. Markets are currently pricing roughly 70% odds of a hike on October 28 and of two additional hikes by the end of January 2027.