On Wednesday, after initially trending downward, treasury markets fluctuated without a clear direction during the trading session. Bond prices oscillated around the baseline before closing with a minor decline, resulting in the yield on the benchmark ten-year note, which inversely relates to its price, rising slightly by 1.0 basis point to reach 4.693 percent. This increase marked the ten-year yield's highest closing in over eight months.
The day's erratic trading patterns were driven by uncertainty regarding future interest rates, sparked by mixed U.S. employment data. Payroll processor ADP reported that private sector job growth decelerated more than anticipated in December. Conversely, the Labor Department announced that weekly jobless claims unexpectedly dropped to their lowest point in nearly eleven months.
ADP reported an increase of 122,000 private sector jobs in December, following an increase of 146,000 jobs in November, while economists had projected growth of 140,000 jobs. The report indicated that hiring slowed across various sectors, with the manufacturing sector experiencing its third consecutive month of employment decline.
"The labor market shifted to a more moderate growth pace in December 2024, with reduced hiring and wage growth," commented Nela Richardson, ADP's Chief Economist.
In contrast, the Labor Department’s separate report showed an unexpected reduction in initial jobless claims for the week ending January 4th. Initial jobless claims fell to 201,000, down by 10,000 from the prior week's unchanged total of 211,000, where economists had predicted an increase to 218,000. This decline brought jobless claims to their lowest since reaching 200,000 in the week ending February 17, 2024.
Anticipation builds with the Labor Department's upcoming monthly jobs report, expected on Friday, which may shed further light on labor market stability. Later in the day, the Federal Reserve's released minutes from its recent monetary policy meeting offered little on interest rate prospects, merely indicating that officials intend to proceed with a "careful approach" in forthcoming decisions.
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