US government bonds slumped Friday as stronger-than-expected job creation and service-sector activity undermined wagers on a recession that will force the Federal Reserve to cut interest rates by year-end.
The selloff, which lifted short-maturity yields by more than 20 basis points, left the market little changed on the week as it erased gains that accumulated after the Fed’s latest rate increase on Wednesday. Investors interpreted Chair Jerome Powell’s comments that day as consistent with a bullish outlook, even as Powell also said more increases were likely and cuts this year were not.
The two-year note’s yield, more sensitive than longer ...