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(Bloomberg) -- Treasuries fell and traders pulled back on bets that the Federal Reserve is set to bring down interest rates next month as policymakers cautioned against further reductions.

Odds of a December cut assigned by the market slipped below 50% as Fed officials signaled concern about inflation that remains above their target. Investors had fully priced in the cut as recently as last month, wagering that weakness in the labor market would outweigh price pressures.

Yields moved higher by about two to three basis points across the curve, the dollar fell for the sixth time in the last seven sessions and the S&P 500 Index dipped more than 1.5%.

“The likelihood of a pause is higher than cut as the Fed wants to slow down while driving in the fog,” said Tracy Chen, a portfolio manager at Brandywine Global Investment Management, referring to the lack of economic data due to the government shutdown.

“Today is the first day in a while that both equities and bonds sold off,” she said.

Speaking at the Pittsburgh Economic Club Thursday, Cleveland Fed President Beth Hammack said, “we need to remain somewhat restrictive to continue putting pressure to bring inflation down toward our target.”

Fed officials Mary Daly, Alberto Musalem and Susan Collins have also weighed in on the December meeting recently.

For Treasuries, the 30-year bond led the selloff. Yields rose about three basis points after the $25 billion auction of the tenor was awarded at 4.694%, higher than the yield just prior to the bidding deadline, suggesting soft demand.

The market reaction to end of the government shutdown — which began Oct. 1 and stopped the flow of most official economic statistics — was contained. But measures of volatility have pointed to the potential for sharp swings in coming days as the government reopens and official data surfaces, potentially altering expectations for what the Fed will do.

“US Treasury investors are bracing for more volatility now that the government will start releasing more data again,” said Michiel Tukker, senior European rates strategist at ING Groep NV in a client note. He added that any new inflation and jobs data will be able to push around the front end of the curve given markets have not fully settled on the Fed’s next steps.

The ICE BofA MOVE Index, a gauge of expected bond-market volatility, has rebounded to a one-month high after recently reaching a four-year low.

Investors in the nearly $30 trillion Treasury market have been relying on private data in the absence of official numbers, with the latest figures from ADP Research signaling a slowing US jobs market. Meanwhile, White House Press Secretary Karoline Leavitt Wednesday said the landmark employment report and consumer price index for October are unlikely to be released.

On Thursday, National Economic Council Director Kevin Hassett added that the jobs report will be released without a reading of the unemployment rate.

Over the course of the shutdown, Treasuries have been stuck in a holding pattern, with yields on 10-year notes fluctuating around the 4% level. A Bloomberg index of Treasuries has returned 0.4% over the span, adding to the market’s best year since 2020.

In the days leading up to the re-opening, however, traders piled into Treasury options targeting a drop in the 10-year yield below 4%, betting the cascade of data will show the economy is weakening.

“Yields are stuck in a relatively narrow range until there is greater clarity on the direction of the real economy and the FOMC’s bias ahead of the December 10th rate decision,” Ian Lyngen, head of US rates strategy at BMO Capital Markets wrote in a note Wednesday. “The mixed private data releases have left us more concerned about the downside for the labor market than anything else.”

--With assistance from James Hirai.