January 6, 2023: On Thursday, U.S. Treasury yields reversed higher as investors assessed anticipations for the Federal Reserve’s interest rate policy plans after solid jobs data.

The benchmark 10-year Treasury yield gained one basis point to 3.72% after trading lower earlier. The 2-year Treasury yield was last trading six basis points higher at nearly 4.43% after dipping lower than a basis point.

Investors digested data that private payrolls rose by 235,000 for December, well ahead of the 153,000 Dow Jones estimate and the 127,000 initially slated for November.

Many expect the strong labour market to keep the Fed in its hiking mode. The Fed’s December appointment minutes, released on Wednesday, indicated that central bank officials expect rates to stay increased and not be cut in 2023.

The minutes suggested that Fed officials would stick to their current restrictive policy, which is approachable until they are satisfied that inflationary pressures ease.

Many investors have been concerned regarding the pace of the Fed’s rate hikes throughout 2022 which will lead the U.S. economy into a recession.

At its December appointment, the Fed announced a 50 basis point rate hike, a decrease from the 75 basis point increases implemented at its previous four sessions.

A series of Fed speakers is because of making remarks as the week keeps going, with St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic wishing to speak on Thursday.

On the data front, November’s balance of trade figures is due to be released on Thursday. This week, many key employment data points, which could inform future Fed policy, are expected.