US Treasuries are set to record their largest weekly sell-off since former President Trump’s "Liberation Day" tariffs, as markets price in the Federal Reserve’s consecutive interest rate hikes.

According to the Financial Times, driven by higher-than-expected U.S. inflation and hawkish remarks from Federal Reserve officials, U.S. Treasuries are set for their largest weekly sell-off in over 18 months. The 10-year U.S. Treasury yield rose to 5.12% on Friday, up 26 basis points from the end of last week, marking the biggest weekly gain since former President Trump announced "Liberation Day" tariffs in April 2025. The 2-year U.S. Treasury yield, more sensitive to interest rate expectations, climbed 32 basis points this week to 4.85%, its largest weekly increase since the end of 2024. U.S. October CPI rose 0.4% month-on-month, exceeding market expectations. Fund managers and traders noted that many investors who had repurchased Treasuries after selling off in September—betting the global bond market sell-off had ended—were forced to exit after the inflation data release, amplifying the rise in yields. Matt Scott, global head of trading at AllianceBernstein, said active management firms’ Treasury buy positions built over the previous two weeks have been largely unwound in the last two to three days. As of Friday, markets have fully priced in a 25 basis point Fed rate hike in December, with a small probability of a 50 basis point hike. Fed Governor Christopher Waller previously stated that if inflation remains high, a 25 basis point hike alone could undermine the Fed’s credibility. Cleveland Fed President Loretta Mester also said on Thursday that interest rates need to be raised to curb inflation. Markets have now largely priced in a second consecutive rate hike in January next year, with a 10% probability of that hike just a week ago; a third cumulative rate hike by June next year has also been fully priced in.