As investors and analysts await the official jobs report for October, the 2-year and 10-year Treasury yields moved in opposite directions.
US Treasury yields came in varied on Friday as investors wait on the jobs report for October for an indication of the labor market and the effect of interest rates. While the 2-year Treasury climbed by more than two basis points to 4.9974%, the 10-year Treasury yield fell to 4.6658%, losing less than one basis point.
The market expects October’s job report on Friday. According to a Dow Jones survey of economists, nonfarm payrolls are expected to grow 170,000 in October. This is a nearly 50% decrease from the 336,000 recorded the month before.
Trends like wage increases and heavy job switching seem to be slowing, according to Amy Glaser, an exec at staffing company Adecco. However, the Senior Vice President’s comment suggests that hiring is still ongoing:
“Folks aren’t able to jump from one job to another and gain these huge, astronomical pay increases, which is good news for the employers. On the flip side, we’re seeing a return of the workforce…The folks coming off the bench are really going to make an impact over the upcoming months.”
ADP recently reported that companies onboarded 113,000 new workers in October. Although it was below the 130,000 Dow Jones consensus estimate, it was higher than the 89,000 recorded in September. Education and health services had the highest number of new jobs at 45,000. Others were trade, transportation, and utilities at 35,000, and financial activities at 21,000. ADP said leisure and hospitality came in at 17,000.
ADP also said pay increased 5.7% from the same period last year, noting that it was the smallest annual increase since October 2021.
US Treasury Yields Move in Opposite Directions as Market Hopes Job Report Keeps Interest Rates Favorable
Nonetheless, investors hope that the expected report will show an easing market, indicating that the rate hikes are making a difference as expected. The Federal Open Market Committee (FOMC) recently voted to leave interest rates unchanged at its meeting on Tuesday and Wednesday. Since it is the second consecutive pause, investors are hoping that the Fed may be over its rate-hiking campaign. However, Fed Chair Jerome Powell has noted that continuous hikes are still possible. Powell said it might be erroneous to believe the Fed cannot continue to increase rates simply because it has paused.
In response to the Fed’s decision to leave rates untouched, the market saw a stock rally with major indexes rising on Wednesday. While the DIJA climbed 0.67%, the S&P 500 and Nasdaq Composite both climbed 1.05% and 1.64%, respectively. Tech stocks had some of the biggest gains on the day, with Nvidia Corp (NASDAQ: NVDA) rising 3.79% while Micron Technology Inc climbed 3.78%. AMD (NASDAQ: AMD) was one of the biggest gainers, closing at $108.04 after adding 9.69%.
The FOMC has increased interest rates 11 times since March 2022. With the rate currently in the 5.25% to 5.5% range, the committee has decided it would proceed carefully and balance risks before making any further decisions.