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(Bloomberg) -- Treasury debt slipped as gains for US stocks reinforced the broadening conviction on Wall Street that Federal Reserve interest-rate cuts are unlikely before December.

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The US government bond market erased gains that were spurred by April inflation data that showed smaller increases in consumer prices than economists estimated. The two-year note’s yield, more sensitive than longer maturities to expected changes in the Fed’s rate, was little changed at about 4.02% after earlier dipping to 3.95%.

While derivative contracts continue to price in two quarter-point rate cuts by the Fed this year, several major Wall Street banks this week forecast a rate cut in December, later than they previously anticipated. The changes were based on the US trade truce with China announced Monday, which along with comments by President Donald Trump during a US-Saudi investment forum in Riyadh drove gains for US stocks.

“Some money is moving out of Treasuries and into risk assets,” said Tony Farren, managing director in rates sales and trading at Mischler Financial Group. “It’s a bit of a momentum trade for now.”

Trump said Saudi Arabia would commit to investing $1 trillion in the US and predicted further gains for the stock market.

Also contributing to the selloff, Farren said, is investor concern about the US fiscal outlook. On Monday, the Republican majority in the House of Representatives unveiled a draft tax bill that’s estimated to result in a $3.7 trillion revenue loss over 10 years.

“The other big part of the inflation story going forward is the fiscal stimulus that’s beginning to emerge on Capitol Hill,” David Kelly, chief global strategist at JPMorgan Asset Management, said on Bloomberg Television. “Inflation’s going to move up in the short run because of tariffs, and then in 2026 because of renewed fiscal stimulus.”

Yields on 10- to 30-year bonds climbed by several basis points to the highest levels in a month. In the interest-rate options market, traders showed a bias for wagers that profit if long-maturity yields rise. The Bloomberg Dollar Spot Index fell 0.5%, erasing about half of its Monday gain.

A heavy slate of new investment-grade corporate bonds — another sign that investors are embracing risk after avoiding it for several weeks after the trade war broke out in early April — was also a factor.