The rising trend of US Treasury bonds paused, with a $125 billion bond issuance imminent.

The momentum of US Treasury bonds paused as traders prepared for a large amount of bond issuance this week. The 10-year US Treasury yield rose by 3 basis points to 4.25%, recouping some of the losses from last Friday's largest single-day drop in a year. The 2-year Treasury yield also rose by 3 basis points, marking its largest single-day drop since 2023. This week is set to be the largest week of long-term bond issuance since May, as the US Treasury plans to issue $125 billion in new 3-year, 10-year, and 30-year bonds, which may put pressure on prices. This has temporarily halted the momentum from last Friday, which was sparked by unexpectedly weak US job data and speculation about Fed Chair Jerome Powell being replaced by someone more inclined to aggressively cut interest rates. Based on swaps contracts tied to policy meeting dates, the market believes there is close to an 80% probability of the Fed cutting rates by 25 basis points in September. While this probability is lower than the peak of 90% last Friday, it is much higher than the initial expectation of 40% before the job data was released. "Market signals indicate that the Fed will have to ignore any price increases triggered by tariffs, and a rate cut in September is on the cards," wrote a strategist at ING in a report. "If this narrative is strengthened, the yield curve could steepen significantly further."