TechFlow news, January 9 — U.S. Treasuries declined as traders nearly eliminated bets on a Federal Reserve rate cut later this month, following a larger-than-expected drop in the December unemployment rate that offset weaker overall job growth. After Friday's report, U.S. government bond prices fell, pushing up yields across maturities by as much as three basis points. Bond traders maintained their forecast for two rate cuts in total during 2026, with the first expected around mid-year.
"For us, the Fed pays more attention to the unemployment rate than to the noise in the headline numbers. So in my view, this is slightly negative for U.S. rates," said John Briggs, Head of U.S. Rates Strategy at Natixis North America. Earlier, labor reports for September, October, and November were delayed due to a six-week U.S. government shutdown from October 1 to November 12. This employment data provides the first "clean" reading capable of reflecting macro-level employment trends.
Whether the Fed will deliver further rate cuts is seen as dependent on labor market performance over the coming months. Previously, in response to labor market weakness, the Fed lowered its target range for short-term interest rates at each of its past three meetings. However, some officials remain concerned about inflation running above target, which is viewed as limiting the pace of additional easing. (Jinshi)
