The 10-year U.S. Treasury yield hit a fresh two-year high Friday as investors anticipate a more aggressive Fed.
The 10-year rate at its highs of Friday's session hit 2.503%, its highest level since May 2019. The yield started the week near 2.15%.
The yield on the benchmark 10-year Treasury note moved 14.3 basis points higher to 2.484% by 4:05 p.m. ET. The yield on the 30-year Treasury bond jumped 8.1 basis points to 2.593%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
Treasurys
The moves higher come amid growing expectations the Federal Reserve will be more aggressive in its tightening cycle.
Fed Chair Jerome Powell on Monday said, "inflation is much too high," and emphasized the Fed would continue to raise interest rates until inflation is under control.
"If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so," Powell said in a speech to the National Association for Business Economics.
Some market participants raised their expectations for rate hikes following Powell's comments. Goldman Sachs on Monday upped its forecast to 50-basis-point hikes at the May and June Fed meetings.
Bank of America on Friday joined those expecting bigger hikes. The firm expects 50-basis-point hikes in June and July, and 25-basis-point hikes at all other meetings this year
"The Fed has accepted that it is behind the curve and will be emboldened by the resilience of the economy and the financial markets. The remaining question is whether it will be willing to impose serious pain on the economy to rein in inflation," BofA economist Ethan Harris said in a note.
Citigroup on Friday called for four 50 basis point hikes starting in May.
Meanwhile, investors looked to signs the economy can still run strong amid Fed tightening.
First-time jobless claims last week reached the lowest tally since 1969, the Labor Department reported Thursday — the latest sign of a resilient labor market.
"With an extremely strong labor market, an economy that looks like it's still going to hold up steadily, but extreme inflation pressures, I would say in the near term, that points to higher yields like we're seeing today," Yung-Yu Ma, BMO Wealth Management's chief investment strategist, said Friday.
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Investors also monitored the latest news from the war in Ukraine.
On Thursday, NATO committed extra troops along its eastern flank. In addition, the U.K. and U.S. announced more sanctions against Russian elites and officials.
U.S. President Joe Biden said that NATO would respond "in kind" if Russian used weapons of mass destruction in Ukraine.
— CNBC's Christina Wilkie contributed to this market report.