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US Treasury yields jumped to an eight-month high on Tuesday, after strong jobs and services data prompted investors to bet that the Federal Reserve could cut interest rates as soon as this year.
The 10-year US bond yield – the global benchmark for fixed-income assets – rose 0.08 percentage points to 4.7 percent, its highest level since April last year.
These moves follow a series of data showing that the global economy remains in good health, casting further doubt on the Fed's rate cut scenario.
The ISM non-manufacturing purchasing managers' index, a gauge of services activity, rose to 54.1 in December, higher than economists' expectations of 53.3. A reading above 50 indicates an increase.
Separate data showed there were 8.1mn job vacancies in November, above forecasts for 7.7mn openings, reflecting unexpectedly strong demand for US workers.
Investors are watching business activity measures and the health of the labor market closely for clues as to how far and how quickly Federal Reserve it will choose to lower interest rates.
Following Tuesday's data, investors were betting the Fed would deliver a quarterly rate cut in July, with about a 35 percent chance of another move by the end of the year. Earlier in the day, the odds of a second-quarter cut were nearly 70 percent.
The Fed began cutting rates from a 23-year high in September, and will make two more cuts before the end of 2024. However, in December policy makers. showed a lower rate of relaxation by 2025, underscoring ongoing concerns about inflation.
US stocks gave up their first gains after the release of November jobs data, with the blue-chip S&P 500 and tech-heavy Nasdaq Composite down 0.4 percent and 0.9 percent respectively in morning trading in New York.