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The 10-year Treasury rate was little changed at 2.91% on Thursday, a day ahead of the nonfarm payrolls report for May.
Yields across the curve also held steady as investors assessed other labor data released on Thursday and remarks by Federal Reserve Vice Chair Lael Brainard. Brainard said it’s hard to envision a case in which the central bank wouldn’t raise rates in September.
What Treasury yields are doing
The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.923%
declined 1.6 basis points to 2.914% from 2.93% at 3 p.m. Eastern on Wednesday.
The 2-year Treasury note yield
TMUBMUSD02Y,
2.633%
fell 2.6 basis points to 2.638% from 2.664% Wednesday afternoon.
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
3.084%
was unchanged at 3.075%.
What’s driving the market
Investors continue to assess the strength of the economy as the Federal Reserve pursues a series of interest rate increases in its bid to get inflation under control.
On Thursday, Brainard told CNBC that she doesn’t support a pause in rate hikes for September. Meanwhile, her colleague, Cleveland Fed President Loretta Mester, said a faster pace of rate increases are on the table for that month.
A tight U.S. labor market has contributed to inflation pressures, putting jobs data in focus on Thursday and Friday. Thursday’s data showed that U.S. private sector job growth softened in May, with payrolls rising by a less-than-expected 128,000, according to the ADP National Employment Report. That was well below the 299,000 gain that had been forecast by economists polled by The Wall Street Journal, though the reading has often been seen as a poor guide to the official jobs data month to month.
New U.S. jobless claims fell by 11,000 last week to 200,000, reflecting the lowest layoffs on record and the strongest labor market in decades. Unit-labor costs, a key measure of U.S. wage inflation, were revised up to a 12.6% gain in the first quarter from the initial estimate of an 11.6% gain.
Friday brings the U.S. nonfarm payrolls report for May, released by the Bureau of Labor Statistics.
What analysts are saying
“The price action in the US rates market was best characterized as choppy with the setup for Friday’s employment report defining the session,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery.
“In contemplating the potential outcomes following the official BLS release, the greatest number of paths on our risk-neutral decision tree (i.e. choose your own rates adventure) point toward a flatter curve.”
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