The bond yields have remained stable as investors anticipate the release of the highly anticipated jobs report, which has the potential to influence a rate cut decision in March depending on its outcome.
Yield Movement
- The yield on the 2-year Treasury (BX:TMUBMUSD02Y) has increased by 2.5 basis points and currently stands at 4.24%. It is important to note that yields move in the opposite direction to prices.
- The yield on the 10-year Treasury (BX:TMUBMUSD10Y) has risen by 1.1 basis points and currently sits at 3.89%.
- Meanwhile, the yield on the 30-year Treasury (BX:TMUBMUSD30Y) has slightly decreased by 0.1 basis points to reach 4.12%.
Factors Driving the Market
All eyes are now on the nonfarm payrolls report, which is expected to reveal the creation of 185,000 jobs in January with an unemployment rate of 3.8%. This report will introduce significant revisions to key elements such as payroll employment, hours worked, wage growth, as well as new population controls that will impact the unemployment rate.
Economists at Morgan Stanley anticipate substantial payroll growth of around 215,000 jobs, citing low jobless claims and favorable weather conditions in early January.
Investors are currently pricing in a roughly one-in-three chance of a rate cut by the Federal Reserve in March.
Over the course of the past four days, the yield on the 10-year Treasury has experienced a significant decline of nearly 30 basis points.
Chris Turner, head of currency strategy at ING, suggests that this trend could be attributed to U.S. regional banks facing ongoing pressure and a widespread belief that policy rates will be lowered throughout the year, making it futile to resist this prevailing trend.
