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Treasuries Slide as New Jobless Claims Unexpectedly Slump

(Bloomberg) — Treasuries fell after jobless claims dropped to their lowest level since 2022 in one of the last readings on the health of the US labor market before the Federal Reserve’s rate decision next week.

Yields edged two to three basis points higher across all tenors, with the 10-year note’s climbing to 4.08%.

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Labor Department data released Thursday showed applications for unemployment benefits fell last week to the lowest in more than three years, signaling that employers are still largely holding onto workers. A day earlier, ADP Research found employers shed jobs in November.

The contradictory data points did little to shake traders’ expectations that the Fed will reduce interest rates for a third straight time at the Dec. 10 meeting to support employment. The market is penciling in a roughly 90% chance policymakers will bring rates down to a range of 3.5% to 3.75%.

“When claims are near Thanksgiving week they can be very difficult to seasonally adjust,” said Tom di Galoma, managing director at Mischler Financial Group. “The job market is softening, led by AI induced layoffs, which will produce a 25 basis point rate cut by the Fed on Dec 10th.”