US Treasuries fall after stronger-than-expected economic data

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U.S. government bonds fell on Tuesday as measures of service activity and the labor market came in better than expected, adding to investors’ expectations that the Federal Reserve will delay its next rate cut.

The 10-year yield rose 0.07 percent to 4.68 percent, its highest level since May last year, while the benchmark two-year Treasury yield rose 0.03 percentage point to 4.3 percent. When prices fall, yields rise.

The moves came after the ISM Manufacturing Purchasing Managers’ Index read 54.1 in December, higher than November’s 52.1 and economists’ consensus forecast of 53.3. A reading above 50 indicates proliferation.

At the same time, demand for US workers rose to 8.1mn in November, up from 7.74mn in October, the Labor Department said, and data showed a difference to forecasts of more than 7.7mn vacancies.

Investors have been watching business activity and the health of the labor market closely to determine the extent and pace. Federal Reserve He chooses to reduce interest rates.

As expected in June before the data, markets are now increasing at a full quarter-point pace in July this year. They now expect a 0.36 percentage point decline by the end of the year, down from 0.42 percentage points before the data.

The Fed first cut rates from a 23-year high in September, and has made two more cuts before the end of 2024. However, in December policy makers It marked a slow easing speed In the year Highlighting persistent concerns about inflation in 2025.

US stocks gave up earlier gains after the release of November jobs data, with the blue-chip S&P 500 and tech-heavy Nasdaq Composite down 0.3 percent and 0.8 percent in early morning trade in New York.