The bond market on Friday appeared increasingly unconvinced that the Federal Reserve will cut interest rates twice in the remainder of the year.

Traders are currently pricing in about a 20% chance that the Fed will keep interest rates unchanged in November or December. Even after the release of strong U.S. jobs data on Friday, swap markets are still pricing in more than 50 basis points of rate cuts by the end of the year, most likely two in a row.

U.S. Treasuries fell this week. The Bloomberg U.S. Bond Index is on track for its fourth straight week of declines, its worst performance since April. The 10-year Treasury yield has risen back above 4%, while the 30-year Treasury yield is 4.41%, the highest since July 30.

The shift reflects a series of mixed reports on the U.S. economy that have failed to make the case for aggressive monetary easing by the Federal Reserve. While the so-called “dot plot” of interest rate expectations by Fed officials predicts two more rate cuts this year, Atlanta Fed President Raphael Bostic said this week he would consider pausing, and San Francisco Fed President Mary Daly said one or two more rate cuts are possible this year.

Kit Juckes of BNP Paribas wrote in a note: "Markets are less certain about the outcome of the next few FOMC meetings, but are increasingly certain that the U.S. economy will not have a 'hard landing,' as evidenced by the nearly 50 basis point increase in 10-year Treasury yields since mid-September, suggesting a view that a 'no landing' is as likely as a 'soft landing,' raising concerns that upside risks to inflation could re-emerge if fiscal tightening measures do not materialize."

Higher-than-expected consumer inflation data on Thursday added to signs of rising wage pressures in last week's nonfarm payrolls data, though Friday's PPI data was more benign overall.

Derivatives market activity suggests investors are hedging against fewer rate cuts than the Fed will deliver. Demand for options that reference the overnight funding rate, or SOFR, is concentrated on contracts that the Fed will cut rates just once this year. In futures markets, there has been a wave of liquidations of positions betting that bonds will rise.