(Bloomberg) -- Bonds extended losses as investors mulled the prospect of slower US interest-rate cuts, a trend that risks upending debt positions everywhere.

Most Read from Bloomberg

• Climate Change Is Killing Buildings in Slow Motion

• How Kyiv Became a Leader in Digital Services Amid Wartime Strain

• Drug Decriminalization Spawns a Political Debacle for Progressives

• A Broken Oil Pipeline Plunges South Sudan’s Capital Into Chaos

• Dhaka's Revolutionary Makeover Pits Visions of Peace Against Vengeance

The selloff pushed yields on two-year Treasuries higher by as much as two basis points on Tuesday, while 10-year yields briefly topped 4.2% for the first time since July. The rate on 10-year German securities touched the highest level since early September. The rout also spread to Asia, where the yield on Australian benchmark debt surged as much as 16 basis points. US yields subsequently retreated to little-changed levels.

At the heart of the selloff lies a reassessment of the outlook for US monetary policy. Traders are paring back bets on aggressive easing given the US economy remains robust and Fed officials this week sounded a cautious tone over the pace of future rate decreases. Rising oil prices and the prospect of bigger fiscal deficits after the upcoming US presidential election are only compounding the market’s concerns.

“With less than two weeks now until the US elections, concerns about the fiscal outlook and its potential upward pressure on inflation have become more acute,” said Robert Dishner, senior portfolio manager at Neuberger Berman in London.

The US 10-year yield rose 10 basis points on Monday. The move steepened a part of the US yield curve that’s been inverted since late 2022, with the gap between three-month and 10-year yields reaching the narrowest level in nearly two years.

“We will see 4.5% probably early next year” for US 10-year yields, said Ed Yardeni, founder of Yardeni Research, speaking in an interview on Bloomberg Television.

Traders have pared the extent of expected Fed interest-rate cuts through September 2025 by more than 10 basis points since the end of last week, according to swap pricing, which implies a Fed target rate of 3.50%-3.75%.

Apollo Management is among those who’ve said the central bank could keep rates unchanged at its next meeting, while T. Rowe Price sees US 10-year yields climbing to 5% next year on risks of shallower rate cuts and as growth improves.

What Bloomberg Strategists say...

“Treasuries may struggle in the coming months, with a strong upward bias for yields as the US economy stays resilient and supply concerns grow”