On Thursday, the yields of most US government bonds experienced a decline, continuing to show resilience despite being slightly higher from their session lows, especially in light of the upcoming nonfarm payrolls report set for release on Friday. The major US exchanges, which include the well-known New York Stock Exchange and Nasdaq 100, opted to fully close their equity and options markets to pay tribute to former US President Jimmy Carter during a National Day of Mourning.
As a result, trading in the bond market concluded early, wrapping up at 2 pm ET. It is important to note that Forex trading remained unaffected, and the schedules for US metals and energy commodities continued as usual. During this session, the 10-year Treasury yield exhibited little variance, standing at 4.69% after a modest drop of 3.6 basis points earlier in the trading period.
Earlier this week, the 10-year yield reached its peak intraday value since April, reflecting ongoing shifts in investor sentiment. Meanwhile, the two-year yield experienced a decrease of 2.3 basis points, settling at 4.27%. The market observed a softening in Treasury yields following renewed comments from Philadelphia Fed President Patrick Harker and Boston Fed President Susan Collins.
Both officials emphasized the central bank’s intention to potentially implement further interest rate cuts in the near future. A Bloomberg poll indicates that the December nonfarm payrolls report, set for release on Friday, is expected to show a gain of 164,000 jobs, which would represent a substantial decrease relative to the 227,000 increase reported in November. Additionally, minutes from the December meeting of the Federal Open Market Committee revealed concerns about the ramifications of President-elect Donald Trump’s proposed policies on inflation and the consequent need for a careful approach to easing monetary policy, as cited in a D.
A. Davidson note. Morgan Stanley's analysis of these insights suggested, "Overall, we see enough in the minutes (and other Fed speak) to retain our outlook for two 25bp rate cuts, in March and June. Inflation is likely to trend lower in the first half of the year, keeping gradual cuts in place, before restrictive trade policies halt disinflation—and further Fed cuts—in the second half of the year." On the economic front, a revision of the December manufacturing index by the Philadelphia Federal Reserve was adjusted to minus 10.9 from an earlier minus 16.4, showing improvement following a revised minus 4.4 recorded in November.
The upcoming January Philadelphia Fed manufacturing index is expected to be available on January 16. In employment news, outplacement firm Challenger, Gray & Christmas reported that companies have planned job cuts totaling 38,792 in December, showing a decline from 57,727 in November, yet representing an increase from the 34,817 cuts reported a year prior. In the corporate sphere, discussions are underway between the Dutch government and Nvidia along with Advanced Micro Devices regarding the establishment of an artificial intelligence facility in the Netherlands.
Meanwhile, Super Micro Computer has initiated volume shipments of high-performance servers equipped with Intel's Xeon 6900 series processors. This comes amid reports that the outgoing Biden administration is preparing another round of restrictions on the export of artificial intelligence chips, as indicated by Bloomberg sources familiar with the matter. West Texas Intermediate crude oil futures saw a positive movement, advancing 0.9% to reach $73.98 per barrel.
In precious metals, gold futures rose by 0.7% to $2,692 an ounce, while silver futures climbed 1.3% to $31.11 per ounce..