U.S. Treasury yields increased on Tuesday, with the 10-year Treasury yield rising over seven basis points to 4.693%, reaching its highest level since April 26, while the 2-year yield rose more than two basis points to 4.299%. This uptick followed the release of economic data indicating persistent services inflation, as the December ISM services price index surged to 64.4 from November’s 58.2. Additionally, the Job Openings and Labor Turnover Survey (JOLTS) reported more openings than expected, suggesting a tight labor market. These factors could lead traders to reconsider anticipated Federal Reserve rate cuts in 2025. Following this, an ADP private payrolls report is expected on Wednesday, forecasting 130,000 job additions in December, ahead of the Bureau of Labor Statistics’ jobs report on Friday, which will include nonfarm payrolls and unemployment data. Investors are particularly attentive to these developments as they may influence future monetary policy, especially regarding interest rates. The Fed is expected to maintain rates in its upcoming meeting on January 28-29, with a 93% probability of no changes according to CME Group’s FedWatch tool. Additionally, minutes from the December meeting will be released on Wednesday for further insights into the Fed’s economic outlook.
