(Bloomberg) — Treasuries slumped and traders further trimmed their outlook for the pace of Federal Reserve interest-rate cuts, deterred by a US GDP report that highlighted sticky price pressures.
Most Read from Bloomberg
The selloff in US government bonds on Thursday pushed yields across the curve to the highest levels of the year. Traders pared back expectations for the timing of a Fed rate reduction, now fully pricing in the first cut in December.
While data showed growth for the quarter was softer than most economists predicted, another hot reading of underlying inflation — and an unexpected drop in weekly jobless claims — took precedence for bond traders. That sets the stage for a $44 billion auction of seven-year notes later on Thursday.
“Higher inflation and a strong jobs market are overshadowing weaker consumption,” said Ian Lyngen, head of US rates strategy at BMO Capital Markets in a note. “Stagflation chatter will…
