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Treasury yields soared on Friday following the release of the November jobs report, which revealed an unexpected drop in the unemployment rate. This suggests ongoing tightness in the labor market, despite the Federal Reserve’s efforts to cool the economy.
The 10-year Treasury note yield surged by 10 basis points to 4.233%, recovering from earlier losses when it dipped to 4.14% earlier in the week. This marks the highest levels seen since early September.
Meanwhile, the 2-year Treasury yield also rose, by over 14 basis points to 4.725%.
Yields and prices have an inverted relationship, with one basis point equaling 0.01%.
The November U.S. jobs report demonstrated continued resilience in the labor market. Nonfarm payrolls in the U.S. increased by 199,000 last month, exceeding the 190,000 jobs predicted by economists surveyed by Dow Jones, and surpassing the October gain of 150,000.
Additionally, the unemployment rate dropped to 3.7%, compared to the forecasted 3.9%.
Stephanie Link, chief investment strategist at Hightower Advisors, told CNBC’s “Squawk Box” on Friday that, “‘The data today, and the data all week long, supports ‘soft landing.’ There’s no question about it.”
Investors have been anticipating economic data signaling a potential easing of the economy, as this would possibly signify the end of the Fed’s rate-hiking cycle and provide clarity on when rates may be cut.
Last week, Fed Chairman Jerome Powell stated that it was “premature” to speculate about rate cuts, and the central bank would tighten monetary policy further if necessary. The Fed’s upcoming meeting next week is expected to keep interest rates unchanged.
Earlier in the week, ADP’s private payrolls report for November showed that 103,000 jobs were added, lower than the 128,000 estimate. Additionally, weekly initial jobless claims figures came in lower than expected.
— CNBC’s Jeff Cox contributed to this report.