US Treasury yields rose on Tuesday after economic data indicated that services inflation is difficult to control.
the Treasury for 10 years The yield rose more than seven basis points to 4.693%, and earlier reached an intraday high of 4.699%, reaching its highest level since April 26. Treasury for two years The yield rose more than two basis points to 4.299%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
The moves came after the ISM Services Price Index for December reached 64.4, up from 58.2 in November. Meanwhile, the Job Opportunities and Labor Turnover Survey (JOLTS) showed a higher-than-expected number of vacancies.
The combination of rising prices and a high level of job opportunities may cause traders to back down on their expectations of an interest rate cut by the Federal Reserve in 2025.
ADP's own jobs report will follow on Wednesday and is expected to show that 130,000 jobs were added in December, ahead of the December jobs report from the Bureau of Labor Statistics on Friday. This will include non-farm payrolls data as well as the US unemployment rate
Investors will pay close attention to the data because it may influence their view on the likely outlook for monetary policy, especially interest rates. This comes after the central bank indicated in December that smaller interest rate cuts were on the horizon before its next meeting on January 28-29.
The Fed is widely expected to leave interest rates unchanged, with traders pricing the latest in about a 93% chance of interest rates remaining steady according to FedWatch from CME Group tool.
Minutes from the Fed's December meeting are scheduled to be released on Wednesday, and investors will be looking to those minutes to gain additional insight into policymakers' thinking and their outlook for the economy.
