Treasuries Dive, Sending 10-Year Yield to Highest in Six Weeks

Treasuries extended their September tumble, sending the benchmark 10-year yield to its highest level since early August, amid stronger-than-expected U.S. economic data.

Bonds slid to session lows after the University of Michigan Sentiment Index beat estimates, while August retail sales topped forecasts, buoying confidence in the economic expansion. Yields across the curve rose, with the 10-year surging as high as 1.89%, up from a three-year low of 1.43% early this month.

Traders also pared expectations for how much the Federal Reserve will lower rates, and now see less than a half-point of additional easing by year-end. At one point last month, the market had priced in almost 70 basis points of further cuts in 2019 as trade friction mounted.

The decline in Treasuries comes as some central-bank officials are re-evaluating the effectiveness of easing efforts and as investors adjust their view of the economy ahead of the Fed’s Sept. 18 decision, where an easing is expected. Helping fuel the move Friday, top European Central Bank officials questioned President Mario Draghi’s quantitative-easing move. Yields were climbing across developed markets: In Japan, the 10-year rate had its biggest intraday jump in more than year.

“Central banks are looking at how much effect they are having by continuing to lower rates,” said Jason Ware, head of institutional trading for 280Securities in San Francisco. “The market may have ...

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