Derivatives trading shows that the decline in US Treasury bonds may continue. The previously released inflation data was higher than expected, further strengthening the market's expectations that the Federal Reserve will take more aggressive action to raise interest rates. The US Treasury bond market was closed on Wednesday due to Veterans Day. The 10-year US Treasury futures contract shows that after the cash market reopens, the yield may rise above 5%. On Tuesday, the yield on the benchmark 10-year US Treasury surged 11 basis points to 4.99%; higher-than-expected inflation data and comments from Federal Reserve officials heightened market concerns that inflation is becoming entrenched. “We are beginning to realize that the stickiness of inflation far exceeds market expectations,” Sonja Laud, head of asset management for Europe, the Middle East and Africa at UBS, said in an interview. “Now all of a sudden, the market has to take into account the expectations of the December rate hike and begin discussions on whether to raise interest rates by 25 basis points or 50 basis points.”

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