On Tuesday, Treasury yields rose higher on the 10-year note, extending their gains from the previous session as traders revisited the possibility of a June Federal Reserve rate cut. The benchmark rate increased by more than 3 basis points to 4.361%, hitting its highest level since November 28 and briefly breaking above 4.4%. Meanwhile, the yield on the two-year Treasury note fell nearly 3 basis points to 4.691%.

Investors are now more cautious about the direction of future rate cuts after an unexpected rebound in output growth at US Dutch bank ING. Markets are interpreting this growth as a decrease in the likelihood of a significant rate cut by the Fed. Last month, the US central bank left interest rates unchanged for the fifth time in a row, as expected, keeping the benchmark overnight borrowing rate in the range of 5.25%-5.5%. The Fed reiterated its expectation of a three-quarter percentage point reduction by the end of the year, with markets currently pricing in three rate cuts, with a slight bias toward a June start date depending on how economic data develops.

By Samantha Johnson

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