U.S. Treasury yields ticked higher Thursday following the release of fresh employment numbers that indicated the labor market was still going strong.
The yield on the 10-year Treasury was up by 9 basis points at 3.995% after crossing the 4% mark briefly on Wednesday. The 2-year Treasury yield was last up by 7 basis points at 4.387%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
ADP said Thursday that private payrolls grew by 164,000 in December. Economists polled by Dow Jones expected a gain of 130,000. Total jobless claims for the final full week of 2023 — also released on Thursday — showed that the pace of layoffs decreased for the week ended Dec. 30, yet another sign of strength within the labor market.
The data comes as investors considered the outlook for Federal Reserve interest rate cuts, including when they could begin and how drastic they could be.
After its last policy meeting in December, the central bank said it expected three rate cuts to take place in 2024. However, traders have been hoping that there will be more than extensive rate cuts this year and that the first one could be coming soon.
Minutes from the Fed’s December meeting were released Wednesday and indicated uncertainty about the path ahead for interest rates even as policymakers believe rate cuts are likely.
Fed officials noted the importance of a “careful and data-dependent approach to making monetary policy decisions” and stated that restrictive policy would continue to be appropriate “for some time” until inflation sustainably falls to the central bank’s target range.
Investors now turn their attention to Friday’s nonfarm payrolls report. Economists expect a gain of 170,000, according to Dow Jones.