San Francisco Fed President Mary Daly said the US central bank will likely need to raise rates again, after a much stronger-than-expected October jobs report. Bond traders start the week with a December hike priced as the likely outcome.
MoneyTurkey Bonds Desk | 9 November 2026
Key points
- “My expectation is we’re going to have to tighten policy further,” Daly told CNBC on Friday, adding that the timing and size are still to be decided.
- US employers added 165,000 jobs in October, against a Dow Jones consensus of 59,000, and unemployment fell to 4.1%.
- The 10-year Treasury yield rose more than 2 basis points to 4.864% on Friday and the 2-year added more than 4 basis points to 4.522%, CNBC reported.
- Fed funds futures priced a more than 77% chance of a quarter-point hike at the 8-9 December meeting, up from more than 66% a day earlier, according to CME FedWatch as cited by CNBC.
What Daly said
“More is likely to be needed, and certainly … I’m prepared to do that if that’s what the economy calls for,” Daly told CNBC’s Steve Liesman. She said she still favours a gradual approach because the outlook is uncertain. She backed the September quarter-point hike, which took the target range to 3.75%-4%, and the decision to hold at the last meeting.
She called the jobs data “good news for American workers” but said real wages are falling. Average hourly earnings rose 3.1% from a year earlier in October, while consumer prices were up 3.7% in September. Households are “on a treadmill of high inflation”, she said. Reuters reported that Daly also described the sell-off in technology stocks as “painful” but orderly.
Daly will vote on the rate-setting committee next year. Richmond Fed President Thomas Barkin said on Thursday that he also sees higher rates ahead but is unsure of the timing, CNBC reported.
The bond market angle
Short-dated yields led Friday’s move, which is what bond traders expect when they bring forward a hike. The 2-year yield rose about twice as much as the 10-year, and the 30-year added more than 1 basis point to 5.263%, CNBC reported.
Treasuries were steady in Asian trade on Monday. The 10-year Treasury yield was at 4.847% at 07:39 UK time, slightly below Friday’s level, according to CNBC market data.
The risk for bondholders is that wage growth keeps inflation sticky, so the Fed tightens more and holds rates there for longer. That would push the front end of the curve higher still.
What to watch
- The next US consumer price index release
- Further Fed speakers this week, after Daly and Barkin
- The 8-9 December policy statement and projections
For information only. Not investment advice.
Sources
- CNBC (Daly interview): https://www.cnbc.com/2026/11/06/fed-daly-interest-rates-inflation.html
- CNBC (October jobs report): https://www.cnbc.com/2026/11/06/jobs-report-october-2026.html
- CNBC (Treasury yields): https://www.cnbc.com/2026/11/06/treasury-yields-inch-lower-as-investors-look-ahead-to-key-jobs-data-.html
- Reuters via Investing.com: https://www.investing.com/news/economy-news/daly-says-fed-rate-hike-likely-despite-painful-techstock-dive-5009005
- CNBC (10-year Treasury yield): https://www.cnbc.com/quotes/US10Y
