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Updated January 8th, 2024 at 08:17 IST

Bond yields poised to climb in sync with US trends following robust job data

US Treasury yields saw an increase on Friday due to persistent strength in the labour market, raising concerns about accelerating inflation.

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Bond yields hold steady as traders await fresh triggers
Bond market news | Image:Republic World
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Bond market news: Government bond yields are anticipated to experience an early-week uptick on Monday, echoing the movement in US yields after the influential non-farm payrolls report indicated ongoing strength in the US labour market.

The 10-year benchmark bond yield is predicted to hover within the 7.23-7.26 per cent range, maintaining the momentum from its previous close at 7.2348 per cent, according to insights from a trader associated with a private bank.

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Attributing the potential rise to the surge and sustained level above 4 per cent in the 10-year US yield, the trader noted, "Amid a lack of fresh cues, yields may remain range-bound during the day."

US Treasury yields saw an increase on Friday due to persistent strength in the labour market, raising concerns about accelerating inflation and potential Federal Reserve rate cuts.

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In December, non-farm payrolls witnessed a rise of 216,000 jobs, surpassing economists' expectations of 170,000 jobs, as per Reuters' poll.

Futures markets now indicate a 44 per cent likelihood that the Fed maintains benchmark rates at their current range of 5.25 per cent to 5.5 per cent at its March meeting, a significant increase from 11.5 per cent a week ago, according to CME's FedWatch Tool.

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Market sentiment suggests an overall reduction of 132 basis points in Fed rates by the year-end, down from earlier expectations of over 160 basis points in cuts two weeks ago.

While oil prices climbed on Friday with US Secretary of State Antony Blinken's Middle East visit, concerns persist domestically over heavy debt sales in the last quarter.

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States plan to raise 4.13 trillion rupees ($49.71 billion), with the central government aiming to sell bonds worth 2.37 trillion rupees, bringing the total supply to around 6.50 trillion rupees.

Key Indicators

  • Brent crude futures down 0.7 per cent at $78.16 per barrel, following a 1.5 per cent rise in the previous session.
  • 10-year US Treasury yield stands at 4.0514 per cent, and the two-year yield at 4.3932 per cent.

(With Reuters inputs.)

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Published January 8th, 2024 at 08:17 IST

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