Treasury yields turned little changed to slightly higher Friday afternoon as traders reassessed December’s robust official jobs data and a weaker-than-expected report from the Institute for Supply Management.
What’s happening
-
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was little changed at 4.387% versus 4.382% on Thursday. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
rose 3.5 basis points to 4.025% from 3.990% on Thursday. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was 4.193%, up 5.7 basis points from 4.136% on Thursday.
What’s driving markets
Data released on Friday showed that the U.S. added 216,000 new jobs in December, beating expectations for a gain of 170,000, according to data released on Friday. The unemployment rate was flat at 3.7%, while hourly wages rose 0.4% for last month and 4.1% over the past year.
Five- through 30-year Treasury yields rose during Friday’s afternoon session, suggests that some traders were giving greater consideration to the strength of December’s jobs report than they were to the ISM data.
ISM’s survey of business conditions at service-oriented companies showed the economy stumbling at the end of last year. The survey dropped to 50.6% in December from 52.7% in the prior month. While still above the 50% threshold that’s seen as positive for the economy, it came in below the 52.5% level expected by economists polled by The Wall Street Journal.
Meanwhile, fed funds futures traders went back to pricing in a more than 60% chance of the first quarter-point rate cut from the Federal Reserve to arrive by March. In addition, those traders see an 85.1% likelihood of five to seven rate cuts of that size arriving by year-end.