Treasury yields were little changed Friday as investors digested the latest jobs data and comments by officials of the Federal Reserve.
Weekly jobless claims surprised economists Thursday by coming in at their lowest level since September 2022, in a further indication of the strength of the U.S. jobs market.
The yield on the 10-year Treasury note was marginally lower at 4.14%. T14he 2-year Treasury yield was up 4 basis points at 4.397%.
There are no Treasury auctions slated for Friday. The University of Michigan’s Consumer Survey of Consumers showed a reading of 78.8 for January, its highest level since July 2021 and up 21.4% from a year ago. That followed a big jump in December and comes despite public opinion surveys showing concern about the nation’s direction.
Yields and prices move in opposite directions. One basis point equals 0.01%.
The Thursday jobs data was the latest in a string of strong economic data points for the U.S. Earlier in the week, retail sales for December beat expectations, and on Tuesday yields jumped after Federal Reserve Governor Christopher Waller said the central bank will likely cut interest rates, but that it “can and should be lowered methodically and carefully.”
Atlanta Federal Reserve President Raphael Bostic said Thursday that he expects rate cuts in the third quarter.
“In the near-term, the robust data meant that investors continued to dial back the prospect of a Q1 rate cut. Indeed, the prospect of a Fed cut by the March meeting was down to 56% yesterday and has moved down further to 55% overnight, its lowest since the Fed’s last meeting in December,” Deutsche Bank analysts wrote in a note early Friday.
“This pushback on rate cuts was echoed by comments from Atlanta Fed President Bostic (a voter on the FOMC this year), who said that his ‘outlook right now is for our first cut to be sometime in the third quarter this year,’ so that’s a contrast with market pricing, which is still fully pricing in a cut by the May meeting.”
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