10-year Treasury yield has biggest one-day jump since 2022 after U.S. job report

Treasurys sold off aggressively after Friday’s surprising January jobs report, sending the 10-year yield up by its most in a single day in more than a year.

What happened

  • The yield on the 2-year Treasury
    BX:TMUBMUSD02Y
    jumped 17.4 basis points to 4.368%, from 4.194% on Thursday, for its biggest one-day advance since May 5 of last year. Friday’s level is the highest since Jan. 24, based on 3 p.m. Eastern time figures from Dow Jones Market Data. For the week, the rate finished up by less than 1 basis point.

  • The yield on the 10-year Treasury
    BX:TMUBMUSD10Y
    surged 16.8 basis points to 4.030%, from 3.862% on Thursday. That is its biggest daily jump since Sept. 26, 2022. For the week, however, the rate ended down by 12.9 basis points.

  • The yield on the 30-year Treasury
    BX:TMUBMUSD30Y
    rose 12.4 basis points to 4.226%, from 4.102% on Thursday. That’s the largest one-day advance since Oct. 25 of last year. It fell 16.2 basis points this week.

What drove markets

In data released on Friday, the U.S. added a surprising 353,000 new jobs last month, easily beating economists’ median expectation for a 185,000-job gain. The unemployment rate stayed at 3.7% and hourly wages rose a sharp 0.6%, their biggest increase in almost two years.

After the report, traders largely took the likelihood of a Federal Reserve interest-rate cut in March off the table, and stuck by a 73.4% chance of at least a quarter-point reduction by May. Fed-funds futures traders also saw a growing likelihood of five rate cuts by December, down from their previous expectations for six, according to the CME FedWatch Tool.

What analysts are saying

“The jobs report was stronger than expected in all the ways that count,” said Chris Low, chief economist at FHN Financial. “In January, there were far more jobs created, much faster wage growth, and a lower unemployment rate than expected. The wage gain might be a weather-related fluke.” However, “the job gain is harder to explain away.”

The report “is not going to encourage” the Fed “to rush into rate-cutting,” Low wrote in a note.

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