(Bloomberg) -- US bonds tumbled on Monday, deepening a rout triggered by strong labor-market data that caused traders to sharply ratchet back bets on aggressive Federal Reserve interest-rate cuts.

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The declines pushed key yields above 4%, levels last seen in August, as investors abandoned their bullish bets on Treasuries. For the first time since Aug. 1, money markets imply fewer than 50 basis points of rate reductions through the end of the year. Traders now see just an 80% chance the Fed cut rates by even 25 basis points in November.

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“The discussion is shifting into whether there’s going to be a cut at all,” said Jan Nevruzi, an interest-rate strategist at TD Securities. “Things are not looking as bad from an economic perspective, and that leads you to reprice the Fed.” TD continues to expect a quarter-point cut in November.

The 10-year yield rose as much as six basis points to 4.03%, while the two-year yield jumped as much as up ten basis points to 4.02%. The underperformance in shorter-dated Treasuries saw a key part of the yield curve briefly re-invert. Historically, bond yield curves slope upward with longer notes paying higher yields, a norm that was disrupted for almost two years as the Fed hiked rates aggressively.

The moves reflect a revival of expectations in the bond market that the Fed will pull off a “no landing” scenario – a situation where the US economy keeps growing, inflation reignites and the Fed has little room to cut interest rates. Friday’s report revived a set of worries around overheating, spoiling a five-month run of gains in Treasuries.

“We’ve expected higher yields, but anticipated a somewhat gradual adjustment,” Goldman Sachs Group Inc. strategists including George Cole wrote in a note. “The extent of strength in the September jobs report may have accelerated that process, with renewed debate on the extent of policy restriction, and, in turn, the likely depth of Fed cuts.”

Monday’s open interest data, which tracks positioning in the futures market, fell sharply across multiple contracts linked to the Secured Overnight Financing Rate, signaling capitulation of long positions. Meanwhile in the options market, there were a bunch of new hawkish hedges targeting just one more quarter-point rate cut for this year.