Bond yields rise as jobs data will show whether rally has been warranted

Bond yields rose on Friday ahead of pivotal data that will show whether a rally in bond prices has been justified.

What’s happening

  • The yield on the 2-year Treasury
    was 4.63%, up 4.1 basis points. Yields move in the opposite direction to prices.

  • The yield on the 10-year Treasury
    was 4.18%, up 2.7 basis points.

  • The yield on the 30-year Treasury
    was 4.28%, up 2.5 basis points.

What’s driving markets

Economists expect the U.S. Labor Department to report 190,000 jobs were created in November when the employment situation report is released at 8:30 a.m. Eastern.

Strategists at ING point out that the jobs forecast, when accounting for striking auto workers going back to work, is pretty much is in line with the 150,000 per month “replacement rate” needed for the U.S. economy to absorb a growing population.

Noting the U.S. 10-year has moved off a peak of about 5%, “[the yield decline] really needs some validation of that move from today’s report,” they say.

Next week will feature two long-end auctions as well as CPI data and the Federal Open Market Committee meeting.

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