The recent sell-off in Treasuries will resume as the world’s biggest economy is in better shape than many expect, according to some major money managers.

Expectations that the Federal Reserve will ease again, even after signaling a pause following its third rate cut of 2019, drove a rally in Treasuries. That’s overdone, according to Janus Henderson Investors and Nikko Asset Management Ltd., who see 10-year yields heading toward 2%.

“The market’s been a little aggressive” on more Fed easing, said Chris Rands, a portfolio manager at Nikko in Sydney. “They’re hitting the targets they are after, with U.S. unemployment at the lowest in 50 years. That’s nirvana.”

Traders will be scrutinizing Friday’s labor market and manufacturing data after Fed Chairman Jerome Powell’s assessment that policy is “in a good place” failed to convince bond markets.

“The strongest message that the Fed has sent today is that we are not that worried about the fragility of the economy anymore,” said Ashwin Alankar, head of global asset allocation at Janus Henderson Investors. “Ten-year rates will easily get to about 2% by the end of the year,” he added.

Treasury 10-year yields gained 1 basis points to 1.78% in Asia trading, after dropping almost 7 basis points on Wednesday. They’ve gained 28 basis points in the last two months. Overnight swaps rates show traders are expecting another reduction by November 2020.

“The Treasuries market will likely be disappointed if there aren’t further rate cuts, so you’re likely to see a move up in yields from current levels,” said Anthony Doyle, a global cross-asset strategist at Fidelity International in Sydney. “We don’t think the Fed will cut further this year or next year.”

This article provided by Bloomberg News.