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The US economy created 256,000 jobs in December, beating expectations and sending yields on long-term US government debt to the highest level since 2023.
The Bureau of Labor Statistics' figure released on Friday exceeded the 160,000 jobs forecast of economists polled by Reuters, and was higher than the downwardly revised figure of 212,000 jobs added in November.
Treasury yields rose as investors bet that… Federal Reserve It will be slower to cut interest rates this year. Futures markets pushed back the expected timing of the first quarter-percentage-point rate cut to September from June before the data was released.
The two-year Treasury yield, which tracks interest rate expectations and moves inversely with bond prices, rose 0.11 percentage point to 4.37 percent. The benchmark 10-year yield rose 0.09 percentage point to 4.77 percent, the highest level since November 2023.
Stock futures fell, with contracts tracking the Standard & Poor's 500 index falling 0.8 percent. The dollar rose 0.4 percent against a basket of six other currencies.
“This number confirms that the Fed does not need to rush…it pretty much confirms that it should be put on hold for a few months,” said Eric Winograd, chief economist at AllianceBernstein.
He added that the bond market was already “on the brink.”
Friday Jobs The data was highly anticipated on both sides of the Atlantic amid a broad sell-off in government bond markets, fueled in part by growing expectations that the Fed will cut interest rates only slightly in 2025.
British Chancellor Rachel Reeves has been increasingly exposed pressure This week after the government's borrowing costs rose, leaving it little room to meet self-imposed fiscal rules.
British bond yields rose after the release of US jobs numbers. The yield on 10-year Treasury bonds rose to 4.88 percent, up 0.07 percentage points on the day, but below the 16-year high of 4.93 percent recorded earlier this week.
US President-elect Donald Trump's plans to cut taxes, impose tariffs and limit immigration have also prompted the Federal Reserve to indicate that it will be more cautious in 2025.
The central bank in December expected just two quarter-point rate cuts this year, compared to expectations of four cuts in September, partly due to continued strength in the labor market.
Jeff Schmid, a senior Federal Reserve official, He said on Thursday The US central bank was “very close” to meeting its inflation and employment targets, confirming expectations that policymakers will refrain from sharp interest rate cuts this year.
The Fed began cutting its key interest rate in September, lowering it by a full percentage point by the end of 2024.
At its next meeting later this month, the US central bank is widely expected to keep interest rates steady at a target range between 4.25 percent and 4.5 percent.
Friday's figures showed the unemployment rate at 4.1 percent, compared to 4.2 percent in November.
