The yield on the 10-year U.S. Treasury jumped to 4.77% on Friday, marking a 14-month peak following a surprisingly strong U.S. jobs report.
- This represents a sharp increase of 9 basis points from the previous close, the highest yield level observed since October 29, 2023.
Why? The catalyst for this jump in bond yields was December’s jobs report, which showcased much stronger-than-expected employment growth. Economists had forecasted an addition of around 164,000 jobs, but the actual figures were significantly higher at 256,000 new jobs. This unexpected strength in the labor market suggested a vigorous economy, potentially leading to sustained or even increased inflationary pressures.
Looking Ahead: This robust employment data has major implications for the Federal Reserve’s monetary policy decisions in 2025. The central bank typically adjusts interest rates in response to economic indicators such as employment and inflation. A hot jobs market often signals a need for higher interest rates to temper potential inflation, which might mean…