Treasury yields continued to edge higher on early 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 had ticked higher by 1 basis point to 4.157% at 2:30 a.m. ET. The 2-year Treasury yield was hovering around the flatline, trading near 4.3548%.
There are no Treasury auctions slated for Friday. Data points scheduled for release include existing home sales for December and preliminary consumer sentiment data.
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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— CNBC’s Jeff Cox contributed to this report.
