Key Highlights

  • Futures markets moved to roughly 90% odds of a quarter-point Federal Reserve hike at the December 8 and 9 meeting once October Inflation came in hot on November 10, 2026.
  • A larger half-point increase now carries roughly 10% to 11% odds, and by early November 12 traders had more than 25 basis points of tightening priced for December and almost 60 basis points by March 2027.
  • Prediction markets put a quarter-point increase at about 85.5% and no change at only around 4.5%.
  • Pressure on long-dated Treasuries, the holdings of iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), has built as the 30-year Yield hit 5.35% and the 10-year stayed close to 5%.

A Fast Reversal in Rate Expectations

Only a few weeks ago a December increase was far from the consensus, yet a string of firm inflation prints turned the debate. The October Consumer Price Index gained 0.4% when 0.3% was expected, while core prices gained 0.3% versus a 0.2% forecast. Governor Christopher Waller had said hours before the release that a half-point move deserved consideration if Core Inflation reached 0.3% or higher. Once the figures landed, the odds of a quarter-point hike settled near 90%. Several regional presidents reinforced the hawkish message: one argued that two more quarter-point hikes would be required, another described the report as borderline disturbing, and a third said further gradual tightening looks appropriate. One major Wall Street bank has paired a March hike with its December call, and another large bank shares that base case. After the September increase the policy range sits at 3.75% to 4.00%, so a December step would lift the upper bound to 4.25%. Canadian investors who buy US-listed funds through domestic brokerages follow these moves closely, since US yields set the tone for Global Bond pricing.

Why the Long End Takes the Brunt

When yields climb, bonds with cash flows reaching furthest into the future lose the most value. On November 10 the 30-year Treasury Yield added 9 basis points to reach 5.35%, and the 10-year rose to 4.98% after briefly trading over 5%, its highest since early October, when it topped out at 5.36%. The two-year yield surged 17 basis points to 4.73%, its largest one-day rise in months, flattening the curve as markets brought hikes forward. Because the TLT fund holds maturities of 20 years or longer, its price reacts about 16 to 17 times to any move in long yields. Weak Demand at a USD 42 billion 10-year auction, with dealers stuck holding about 10% of the issue, showed that buyers want a higher yield to absorb the heavy supply.

Two-Sided Risks Ahead

The outlook for bondholders cuts both ways. Another firm reading, whether the October producer price index on November 13 or a further solid labour report, would lift the odds of a half-point hike and push yields higher, and the dollar index already stands at its highest since April 2025. Slower growth or cheaper energy, with gasoline now under USD 4 a gallon, could instead cool inflation and let yields drift lower. If a tightening cycle ends quickly, long bonds could eventually benefit, as investors start pricing the cuts that usually follow a peak in policy rates. For now the balance of risks leans toward higher yields, and income-focused holders are asking whether the 5% zone on the 10-year pays enough to justify the risk.

Where Things Stand

A December rate rise is now treated as close to certain, and the argument has moved to its size. Holders of long Treasury funds should watch for a half-point move and further growth in term premiums as Supply expands. The 30-year auction on November 12, PPI on November 13 and November CPI ahead of the December 8 and 9 meeting are the next catalysts.