(Bloomberg) -- Treasury yields rose Thursday as traders pared wagers on the extent of the Federal Reserve’s interest-rate cuts in 2024 following comments by Mary Daly and John Williams, presidents of the San Francisco and New York banks.

Daly said it’s premature to declare victory against inflation and that the central bank isn’t contemplating rate cuts at all right now. Williams said he expected Fed policy to remain restrictive “for quite some time.” 

The comments pushed back against expectations for rate cuts that mounted earlier this week amid dovish comments by Fed Governor Christopher Waller on Tuesday, which helped the bond market rally. Fed Chair Jerome Powell is slated to speak Friday.

Treasury yields extended their climb after a gauge of economic activity in November, the MNI Chicago Business Barometer, rose more than expected to the highest level in more than a year. They reached session highs — with five- to 10-year rates climbing at least 10 basis points — in late trading on the final day of a month that’s still likely to be the market’s best in 15 years. 

The benchmark 10-year note’s yield rose nearly 9 basis points, its second-biggest daily increase in November, topping 4.34%. But it’s still down more than half a percentage point from the end of October and more than 60 basis points from the multi-year high reached on Oct. 23.

The moves were “far more consistent with a technical reprieve than a wholesale shift in sentiment,” BMO Capital Markets strategist Ian Lyngen said in a note. The gradual rise in yields over the course of the global trading day “speaks to the magnitude of the recent rally and implies that the selling at month-end in Treasuries simply reflects the over-extension of the bid.” 

Trading between 3 p.m. and 4 p.m. New York time was likely influenced by the month-end rebalancing of bond indexes, in which securities issued during the month are added while ones that no longer fit the index criteria are removed.

For the Bloomberg Treasury index, the change was expected to result in an increase of 0.12 years in the benchmark’s duration at 4 p.m., a bigger-than-average change. While index duration increases cause passive investors to execute buy orders around the time of the rebalancing, whether the flows move the market depends on how accurately sellers of bonds estimated how much buying was likely to occur.

Through Nov. 29, the Treasury index returned 3.9%, on pace for its biggest monthly gain since November 2008.

(Adds Treasury index return and month-end trading beginning in fifth paragraph and updates yield levels.)

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