(Bloomberg) -- Treasuries fell as investors ramped up bets that the Federal Reserve will need to raise interest rates, while escalating tensions in the Middle East added to inflation concerns.Yields rose about two to five basis points across the curve in Asian trading Monday, with the biggest moves in shorter-dated bonds such as five- and two-year notes, which are more sensitive to changes in Fed policy expectations.
Investors are still assessing the strong US jobs report on Friday, which topped all forecasts and reaffirmed the view that the Fed, under Chairman Kevin Warsh, will need to raise borrowing costs to contain inflation that is running above target.
Meanwhile, fresh Israeli strikes on Iran have pushed up oil prices, potentially adding to inflationary pressures in the world’s largest economy.Traders have returned to pricing in a quarter-point Fed hike by December and around a 16% chance of a second increase.
Last Thursday, markets were betting that March 2027 would be the earliest timing for a quarter-point hike.
“Resilience in the labor market makes it easier for a central bank to defend tighter policy warranted by higher inflation,” said Abbas Keshvani, director of Asia macro....
