Treasuries Losing Run Longest in Two Years on 2015 Liftoff Bets

Are Interest Rates Going Up? Watch Yields for Clues

Treasuries haven’t had such an extended losing run since June 2013, as investors step up bets that the first Federal Reserve interest-rate increase in almost a decade will come this year.

U.S. sovereign debt retreated for a sixth day Monday, after Boston Fed President Eric Rosengren added his voice to the chorus of Fed officials saying liftoff could come at their Dec. 15-16 meeting. The yield on 10-year Treasury notes touched a three-month high of 2.37 percent that day. Futures put the odds for a rate rise by year-end at 68 percent, compared with a 50 percent probability at the end of last month.

“Most market participants have already discounted the very high probability of a rate hike in December,” pushing up yields, said Hajime Nagata, a debt money manager in Tokyo at Diam Co., which oversees about $140 billion. “The market has shifted from when is the first rate hike to when is the second rate hike, when is the third.”

The U.S. 10-year note yield was unchanged at 2.34 percent as of 9:51 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2 percent Treasury maturing in August 2025 was 97.

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