Treasury yields climb as traders price a slower path to rate cuts

NEW YORK — The Treasury market spent the early part of the year behaving as if a first rate cut would reopen the easy-money decade. It is not behaving that way now. Long yields have climbed as traders mark a slower, bumpier path for the federal funds rate.

Two forces are doing the work. Services inflation has not rolled over as cleanly as goods prices did, and the Treasury must still issue a mountain of coupons into a world where foreign official buyers are less automatic.

Equity investors who treated bond volatility as background noise are being reminded that discount rates are a product, not a vibe. Duration is earning its keep again, which is another way of saying it is hurting.