Fed Holds Off on Rate Cuts as Jobs, Spending Data Reinforce Resilience - US Treasury Yields Rise

U.S. Treasury yields rose on January 22, 2026, as strong jobs and consumer spending data reinforced expectations that the Federal Reserve will delay rate cuts, with traders now pricing in the first reduction no earlier than late 2026. The 2-year yield climbed over 3 basis points to 3.62%, its highest since December 10, 2025, while the 10-year yield surged more than 2 basis points to about 4.27%. Initial jobless claims last week came in below forecasts, signaling a resilient labor market, while November consumer spending showed solid growth, supported by wage gains. The Fed’s preferred inflation gauge, derived from spending data, rose modestly, aligning with expectations. After three consecutive 25-basis-point cuts in late 2025, officials signaled a pause at the upcoming January 27–28 meeting. Markets expect one cut by mid-2026 and another by year-end. Meanwhile, concerns over U.S. tariffs on Greenland eased after President Trump withdrew threats, helping Treasuries recover losses. Attention now turns to Japan’s BOJ rate decision on January 23, amid fiscal worries and yen weakness.