Authorities bond yields fall as traders weigh the potential for a weaker job market

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, USA on Wednesday, November 9, 2022.

Michael Nagel | Bloomberg | Getty Images

US Treasury yields fell on Wednesday as traders sorted through the latest read on the jobs market to gauge the possibility of a recession in the coming months.

The return on the benchmark 10 year treasury note fell 3 basis points to 3.307%, while the yield on the 2-year bond fell 8 basis points to 3.751%. Yields move inversely with prices.

Returns were higher before ADP’s private payroll report underperformed and signaled a slowdown in hiring in March.

This report comes after job vacancies data released on Tuesday showed job vacancies fell below 10 million in February for the first time in almost two years, putting pressure on government bond yields as investors debated whether the information could deter the Fed from further rate hikes.

Future monetary policy moves remain in focus, with the Federal Reserve continuing to tackle inflation and the aftermath of bank failures that have roiled bond markets in recent weeks.

The Fed’s next meeting is scheduled for early May, when interest rates are expected to rise another 25 basis points, according to CME Group’s FedWatch tool.

Federal Reserve Bank of Cleveland President Loretta Mester said in a speech in New York on Tuesday that the central bank must raise interest rates to stem inflation. She gave no information.

“Exactly how much higher the federal funds rate needs to be from here, and how long policies need to remain hawkish, depends on how much inflation and inflation expectations fall,” Mester said, adding that “will depend on how.” much as demand slows, supply problems are resolved and pricing pressures ease.”

Investors are also eyeing the nonfarm payrolls dataset, which is due to be released on Friday.

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