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investors assess interest rate, economic outlook

Traders watch prices in the Ten-Year Treasury Note options pit at the CME Group.

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U.S. Treasury yields were little changed Wednesday, with the 10-year Treasury yield trading around levels last seen in 2007, as investors fretted over the potential for tighter Federal Reserve monetary policy for longer than expected.

At 5:45 a.m. ET, the yield on the 10-year Treasury was up slightly at 4.81%. Earlier in the day, it rose to a high of 4.884% after first crossing the 4.8% mark on Tuesday — reaching levels last seen in 2007.

The 30-year Treasury yield also hovered at levels last seen in 2007 and was last less than one basis point lower at 4.934%. It briefly traded above 5% earlier in the session.

The 2-year Treasury was last down by less than 1 basis point at 5.146%.

Yields and prices have an inverted relationship. One basis point equals 0.01%.

The latest jump in yields was fueled by Tuesday’s Job Openings and Labor Turnover Survey for August. The report showed 9.61 million job openings, higher than the 8.8 million economists surveyed by Dow Jones anticipated.

Investors took that as a sign of continued tightness in the labor market, which could prompt the Fed to raise interest rates further. The central bank began hiking rates in March 2022 in an effort to ease inflation and cool the economy, including the labor market.

In recent weeks, there have been mixed messages from Fed officials about whether interest rates will need to go higher still this year. However, they have widely suggested that rates will likely need to remain elevated for longer than previously expected, prompting renewed concerns about higher rates leading to a recession.

Further data that could inform the Fed’s monetary policy decisions is expected as the week continues. This includes ADP’s employment change figures and ISM’s purchasing managers’ index report for the service sector on Wednesday, as well as September’s nonfarm payrolls data on Friday.

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