US rates have been drifting higher over the past week mainly because stronger economic data and the run‑up to the Fed’s December meeting are pushing investors to price in fewer or later rate cuts, which lifts Treasury yields and market borrowing costs. In other words, it is expectations and data, not an actual Fed hike, driving the move.
What is actually rising?
Over the last week, the move has been in market interest rates like U.S. Treasury yields (for example, the 10‑year note edging up toward about 4.2%), not the Fed’s policy rate itself, which is still around 4% after recent cuts. Short‑term yields have risen less than long‑term yields, leading to a modest steepening of the curve as the 10‑year climbed more than the 2‑year.
Data and Fed expectations
Recent U.S. labor data have surprised to the upside, with jobless claims dropping and job openings remaining higher than expected, which suggests a firmer labor market than markets were pricing in a few weeks ago. That resilience makes it harder for the Fed to justify aggressive or early rate cuts, so traders demand higher yields to hold longer‑duration bonds.
Positioning ahead of the Fed meeting
Markets are now focused on the Fed’s final meeting of the year, where another quarter‑point cut is widely anticipated but debated given still‑elevated inflation and solid employment. As investors reassess the likely pace of cuts and the “terminal” level for rates in 2026, they are selling Treasuries at the margin, which pushes prices down and yields up over the past several sessions.
How this feeds through to “rates”
Because Treasury yields benchmark everything from mortgages to corporate borrowing costs, a move of 10–15 basis points in the 10‑year over a week can show up as “rates rising” across the system even without a Fed hike. For your framing, the story right now is less about a new tightening cycle and more about markets walking back the most dovish Fed‑cut narrative as data come in a bit stronger than feared.
The Sources
[1] U.S. Treasury Yields End Higher https://www.wsj.com/finance/ten-year-jgb-yield-declines-after-lackluster-japan-gdp-data-1d2d1646
[2] Weekly fixed income commentary | 12/08/2025 https://www.nuveen.com/en-us/insights/investment-outlook/fixed-income-weekly-commentary
[3] US 10 Year Treasury Note Yield – Quote – Chart https://tradingeconomics.com/united-states/government-bond-yield
[4] United States Fed Funds Interest Rate – Trading Economics https://tradingeconomics.com/united-states/interest-rate
[5] Powell on Track for Fed Rate Cut Despite Some Dissent https://finance.yahoo.com/news/powell-track-fed-rate-cut-210000294.html
[6] Fed’s Powell: Balances inflation, labor risks, and rate cuts https://www.usbank.com/investing/financial-perspectives/market-news/federal-reserve-interest-rate.html
[7] Fed meeting October 2025: The Fed cuts again https://www.fidelity.com/learning-center/trading-investing/the-fed-meeting
[8] Consumer Price Index Summary – 2025 M09 Results https://www.bls.gov/news.release/cpi.nr0.htm
[9] US Inflation Rate (Monthly) – United States – Historical Da… – YCharts https://ycharts.com/indicators/us_inflation_rate
[10] Daily Treasury Par Yield Curve Rates https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve
[11] Federal Reserve Board – News & Events https://www.federalreserve.gov/newsevents.htm
[12] Press Releases https://www.federalreserve.gov/newsevents/pressreleases.htm
[13] Federal Reserve Calibrates Interest Rate Policy Amid Softer Hiring … https://www.usbank.com/investing/financial-perspectives/market-news/federal-reserve-tapering-asset-purchases.html
[14] Federal Reserve (@federalreserve) / Posts / X https://x.com/federalreserve
[15] Latest inflation report shows prices rose by the fastest pace since January https://www.cnn.com/business/live-news/us-cpi-markets
[16] United States Inflation Rate – Trading Economics https://tradingeconomics.com/united-states/inflation-cpi
[17] CPI Home – U.S. Bureau of Labor Statisticswww.bls.gov › cpi https://www.bls.gov/cpi/
[18] FOMC & Fed Meeting | News & Analysis – FXStreet https://www.fxstreet.com/macroeconomics/central-banks/fed
[19] Daily Treasury Rates | U.S. Department of the Treasury https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2025
[20] Federal Reserve news – Today’s latest updates https://www.cbsnews.com/tag/federal-reserve/
