Treasury yields ticked lower Friday as investors digested economic data and assessed its implication for the Federal Reserve's hiking cycle.
The yield on the benchmark 10-year Treasury was down by about 16 basis points at 3.567%. The 2-year Treasury yield fell around 19 basis points to 4.264%. The yield on the 30-year Treasury was down nearly 11 basis points at 3.689%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Nonfarm payrolls increased by 223,000 for the month of December, above the Dow Jones estimate for 200,000, while the unemployment rate fell to 3.5%, 0.2 percentage point below the expectation.
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Wage growth was less than expected in an indication that inflation pressures could be weakening. Average hourly earnings rose 0.3% for the month and increased 4.6% from a year ago. The respective estimates were for growth of 0.4% and 5%.
"There is nothing within the release that would imply it's anything other than a strong jobs report with moderating wage pressure," Ian Lyngen, BMO's head of U.S. rates, said in a note. "As a result, we'll argue the 25 bp vs. 50 bp rate hike debate now comes down to next week's CPI print."
Tightness in the labor market is often closely associated with high inflation, which the Fed has been trying to cool. Many look to Fed speaker comments and new economic pieces data for signals that the Fed can slow or pause rate increases in 2023.
Money Report
Bond yields fell further when Friday's ISM's non manufacturing Purchasing Managers' Index showed that production numbers fell, a sign that the Fed's rake hikes may be working to slow the economy.
