US bond yields surged after better-than-expected data on factory activity pushed traders to cut their bets on interest-rate cuts this year.
US Treasury bonds dropped, with investors slightly reducing their expectations of future interest rate cuts. The decline occurred despite a slowdown in the country’s manufacturing sector, which contracted in April due to President Trump’s tariffs. However, some analysts saw the pace of contraction as relatively mild.
The shift in market sentiment led to an increase in bond yields across maturities, with two-year yields rising by up to 12 basis points on Thursday. This move was largely driven by traders adjusting their expectations of future interest rate cuts and reducing their exposure to shorter-term bonds.
Source: https://www.bloomberg.com/news/articles/2025-05-01/us-bonds-slide-as-factory-data-spurs-pullback-in-rate-cut-bets