Treasury Selloff Accelerates, European Bonds Follow Suit — 2nd Update

By Emese Bartha

The selloff in U.S. Treasurys accelerated in early U.S. trade on Thursday after President Trump dashed hopes for an Iran peace deal.

"We don't need a deal with Iran," Trump said on his Truth Social platform. The comments caused oil prices to rise, supporting the prospect of further interest-rate rises by the Federal Reserve.

The two-year Treasury yield rose 9 basis points to 4.814%, while the 10-year yield increased almost 6 basis points to 5.046%, according to Tradeweb.

Fed rate hike expectations for December remained in favor of a 25-basis-point hike, priced with an 88% probability, while the probability of a 50-basis-point hike was 12%, according to LSEG.

Eurozone and U.K. government bond yields, which traded lower earlier in the day, turned higher. The 10-year German Bund yield increased 1.3 basis points to 3.327%. The 10-year U.K. gilt yield rose 5.6 basis points to 5.281%.

Gross domestic product in the U.K. grew 0.7% in the three months through September compared with the previous quarter, the U.K.'s statistics agency said. This marked the strongest quarterly expansion in economic activity since the first quarter of 2024, although it was in line with the consensus forecast in a Wall Street Journal survey of economists.

The data support market expectations of a 25-basis-point interest-rate hike by the Bank of England in December, currently priced with a 74% probability, according to LSEG.

"For the Bank of England, this data will come as positive news, highlighting the resilience of the U.K. economy in the face of headwinds such as the energy price shock due to the wars in Ukraine and the Middle East," said Sam Jochim, economist at EFG Asset Management.

"This suggests that the U.K. economy can withstand a further tightening of monetary policy," he said in a note.

Still, with the Fed's Dec. 9 interest-rate decision some weeks ahead, the landscape might change.

"The December FOMC meeting feels so far away that enough can happen between now and then to deter the Fed from hiking at all, even though the baseline view should be a single 25 basis points hike," said Thierry Wizman, global FX and rates strategist at Macquarie Group, in a note.

A number of things could prevent the Fed from hiking in December, or certainly deter a 50-basis-point hike, he said. These includes the risk of a U.S. government shutdown, possible further declines in the price of oil on hopes for a U.S.-Iran peace deal, and a potential further selloff in stocks if the AI story worsens, he said.

On Thursday, the Treasury will auction $25 billion in 30-year bonds.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

November 12, 2026 09:41 ET (14:41 GMT)