Uncertainty creeps back into US Treasury mkt

NEW YORK, Feb 07 (Reuters): A rethink on when the Federal Reserve will cut interest rates is reverberating through the fixed income market, heightening risk for those betting the explosive rally that took bonds higher at the end of 2023 will continue this year.
Investors piled into Treasuries late last year on expectations that the Fed will cut rates as soon as the first quarter of this year, sending government bond prices roaring back from 16-year lows.
Many are now recalibrating those bets following a blowout US jobs number and a cautious message from the Fed, which last week said the strong economy could spur an inflationary rebound if rates are cut too soon. Yields on the benchmark 10-year Treasury, which move inversely to price, have surged in recent days and now stand 20 basis points above December's lows.
While investors still expect the Fed to deliver a number of rate cuts this year, they are now less certain of when the central bank will begin lowering borrowing costs and how far rates will fall. Worries over an expected surge of bond supply resulting from government issuance are also sapping bulls' enthusiasm.
"The combination of the jobs numbers and the Fed press conference has really caused a splintering in the potential outcomes," said Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income, which manages $794 billion in assets.