U.S. Treasury yields held steady on Friday as investors awaited key labor market data that will give fresh insights into the state of the economy and could affect the Federal Reserve’s next policy moves.
At 5:25 a.m. ET, the yield on the 10-year Treasury was little changed at 4.186% as it continued to hover near levels last seen in November 2022, which it had jumped to earlier in the week. The 2-year Treasury was up by over 2 basis points at 4.925%.
Yields and prices have an inverted relationship and one basis point equals 0.01%.
Investors considered what could be next for the economy and Federal Reserve monetary policy as they awaited July’s jobs report.
Economists surveyed by Dow Jones are expecting nonfarm payrolls to have risen by 200,000 in July. That would be just shy of June’s 209,000 gain and would mark the smallest increase since December 2020.
The unemployment rate is expected to remain steady at 3.6%, while economists are anticipating hourly wages to have risen by 0.3% on a monthly basis and 4.3% on an annual basis.
The figures could give an indication of whether the Fed’s interest rate hikes are having the desired effect and are indeed filtering through to the economy and cooling it. It could therefore also inform the central bank’s next policy discussions and decisions.
Following the Fed’s last meeting in July, chairman Jerome Powell suggested that a broad range of options are still on the table regarding interest rates, including further hikes, but also a pause of the central bank’s rate-hiking campaign. Powell indicated that economic data will play a key role in such decisions.