US 10-Year Yield Holds Firm

The yield on the US 10-year Treasury note hovered around 4.48% on Thursday after climbing in the previous session, as stronger-than-expected labor market data reinforced expectations of tighter Federal Reserve policy. The ADP report released Wednesday showed private-sector employment rose by 122K in May, beating forecasts and reaching its highest level since January 2025. Earlier in the week, JOLTS data indicated that job openings increased in April to their highest level since November 2024. Investors are now awaiting Friday’s nonfarm payrolls report for further clues on the strength of the labor market. Treasury yields also found support from escalating tensions in the Middle East, which have kept oil prices elevated and added to inflationary pressures. Markets currently price in an 85% chance of a quarter-point Fed rate hike by year-end, up from 60% a week ago.

The yield on the US 10-year Treasury note climbed further to 4.49% on Wednesday after the ADP report showed that the private sector added 122K jobs in May, exceeding expectations and marking a new high since January 2025. The data pointed to a labor market that continues to gain momentum, reinforcing expectations that the Fed could raise interest rates later this year. Earlier this week, JOLTS data showed that job openings in April rose to their highest level since November 2024, further highlighting the resilience of labor demand. Treasury prices also came under pressure from escalating tensions in the Middle East, which pushed oil prices higher for a third consecutive session and renewed concerns about inflation. Markets now price in an 85% probability of a quarter-point Federal Reserve rate hike by year-end, up from 60% a week ago.

The yield on the US 10-year Treasury note rose to 4.48% on Wednesday as escalating tensions in the Middle East pushed oil prices higher for a third consecutive session, fueling concerns about inflationary pressures. The US and Iran exchanged additional military strikes, further straining a fragile ceasefire agreement. Meanwhile, US President Trump proposed a new tariff of at least 10% on imports of goods allegedly produced using forced labor from 60 trading partners, including China, the EU, and Japan. Investors are also awaiting key economic releases, including the ADP report and the ISM Services PMI, which will provide further insight into the strength of the US economy and shape expectations for the Fed's next policy moves. On Tuesday, JOLTS data showed that job openings in April reached their highest level since November 2024, pointing to continued resilience in the labor market. Markets currently assign almost a 60% probability to a Federal Reserve rate hike by December.