US bond markets spent the week caught between a hawkish Fed setup and a sudden flight-to-safety rally in Treasuries.
Most published research expects the FOMC to hold at its October 28 meeting but frame it as a hawkish pause, with a December hike widely flagged — market-implied odds cited across the week ranged from roughly 65% to as high as 90%. The case rests on firm core CPI and PPI, Brent near six-month highs, hot expected core PCE around 3.1%, and Chair Warsh's reported zero tolerance for inflation slippage. Several forecasts pencil in Fed funds reaching 4.25% by year-end, with one outlier arguing for 75bp more by March.
Ten-year yields plunged roughly 18–19bp to near 4.96%, but analysts were split on what it meant. One camp called it peak bond stress and extended duration; others argued the bid was pure AI-selloff fear, not a disinflation signal, and should fade. Published year-end 10Y targets clustered between 5.05% and 5.29%. Longer-horizon views leaned toward structurally higher yields on supply, demographics and AI capex.