NEW YORK/LONDON, Jan 9 (Reuters)US— Treasury yields retreated from an eight-month high on Thursday while the dollar strengthened against major currencies. Markets weighed the Federal Reserve’s interest rate cut moves amid US economic resilience.
The benchmark 10-year US Treasury yield fell 0.45 basis points to 4.689%. It had reached a peak of 4.73% on Wednesday, the highest since April 2024. The closely watched US monthly payrolls report will shed some clues to the Fed on policy on Friday. Markets already fully price just one 25-basis-point cut in the US federal funds rate for all of 2025.
Yields have come down a little bit heading into Friday’s payroll number, and it’s indicative of the level of concern, which is that maybe the move in yields has been overdone, said Drew Matus, chief market strategist at MetLife Investment Management in New Jersey.
A further reading of the Fed’s minutes for its December policy meeting, released Wednesday, showed that officials were getting anxious about President-elect Donald Trump’s proposed tariffs and immigration policies as possibly dragging out the battle against inflation.
A market selloff in Treasuries continued on Wednesday after a CNN report that President-elect Donald Trump was considering declaring a national economic emergency to provide a legal justification for a series of universal levies on allies and adversaries.
US stock markets were closed on Thursday to mark the funeral of former US president Jimmy Carter. US bond markets close early at 2 p.m. ET (1900 GMT).
“I put the fair value 10-year yield at 4.50%, and yet we’re still at 4.66% headed into a report that will either show continuing strength in the labor market, in which case the rate cuts aren’t the right thing to be doing or show labor weakness and will ratify the Fed’s view of the world against the backdrop of inflation that remains elevated and a high degree of uncertainty in policy and economic outcomes,” Matus said.
