Treasury Yields Rise

Published December 27, 2024

U.S. Treasury yields rose earlier in the holiday-shortened week as investors reacted to the latest economic data. Yields continued to increase towards the end of the week after jobless claims fell more than expected.

On Monday, the U.S. Department of Commerce reported that durable goods orders, which measures the change in the total value of new orders for long-lasting manufactured goods, fell 1.1% in November after experiencing an increase by 0.8% in October. The report also revealed that orders for non-defense capital goods, a marker of business spending, rose by 0.7% in November after experiencing a decrease of 0.1% in October. 

"The rebound in core capital goods orders and shipments could reflect some relief from policy uncertainty now that the election is behind us," said Deputy Chief U.S. Economist at Oxford Economics, Michael Pearce. "We expect equipment spending growth to be above 4% next year, in part thanks to spillovers from the boom in new factory construction and the build out of AI."

The benchmark 10-year Treasury note yield opened the week of December 23 at 4.52% and traded as high as 4.65% on Thursday. The 30-year Treasury bond opened the week at 4.72% and traded as high as 4.82% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 1,000 to 219,000 for the week ending December 21. This was less than the 223,000 claims that analysts anticipated. Continuing claims increased by 46,000 to 1.91 million.

"The rate of hiring has clearly slowed, based on evidence from a variety of economic data releases, driving the trend in continuing claims higher," wrote Jefferies U.S. economist, Thomas Simons. "However, the data also shows that the rate of firing/lay-offs has not accelerated accordingly. This is unusual as there is typically an inverse correlation between the rates of hiring and firing, but current conditions reflect an acknowledgement that labor supply is scarce, likely to become more scarce, and thus more valuable to retain than it was in the past."

The 10-year Treasury note yield finished the week of 12/23 at 4.63%, while the 30-year Treasury note yield finished the week at 4.82%.