US economic expansion data reshapes bets on the next rate move

DataChief · 2026-01-12T14:02:19+00:00

The market showed volatility after the US GDP growth of 4.3% in the third quarter, which led to a revaluation of Treasury bonds. Expectations regarding the Federal Reserve were adjusted, moderating bets on rate cuts.

DataChief

2026-01-12 14:02:19

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The market reacted with volatility after the release of the US third-quarter GDP growth, marking an expansion level not seen in the last two years. With a 4.3% increase, the North American economy showed a stronger performance than expected, leading to an immediate revaluation in fixed income markets.

US Treasury bonds experienced significant movements during the day. The yield on 10-year notes reached intraday highs close to 4.165%, a direct reflection of new perceptions about monetary policy. In comparison, these yields are slightly below German bonds by approximately 3 basis points, while maintaining a 2 basis point gap over British bonds with similar maturity.

The most relevant aspect for traders is the change in projections regarding the Federal Reserve. After the macroeconomic data, the market adjusted its expectations toward a less dovish scenario for the upcoming January decision. Bets on rate cuts moderated to around 3 basis points, down from the 4 basis points expectation that prevailed at the close of the previous session.

This repositioning reflects how robust GDP growth redefines the risk balance for policymakers: with an economy expanding at an accelerated pace, the urgency for new cuts is significantly diminished.

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