Bond Report: Treasury yields steady as traders brace for jobs report

U.S. Treasury yields held their ground on Friday ahead of a monthly jobs report that could bolster hopes that a strong labor market and brisk consumer spending will drive the U.S. expansion forward.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -0.42% was flat at 1.856%, while the 2-year note rate TMUBMUSD02Y, -2.06% was up 0.4 basis point to 1.580%. The 30-year bond TMUBMUSD30Y, -0.25% edged 0.3 basis point lower to 2.327%.

What’s driving Treasurys?

The labor market’s health will draw the spotlight with the U.S. Labor Department’s employment report for December at 8:30 a.m. ET. Analysts polled by MarketWatch, on average, expect the U.S. economy to add 165,000 jobs, up from 266,000 in November. The unemployment rate is forecast to hold steady at 3.5%, and for average hourly earnings to climb 0.3%.

Investors have attributed the longest U.S. economic expansion on record to the strength of households which have helped weather the global slowdown drive by the U.S. – China trade war.

An earlier report by Automatic Data Processing on Wednesday suggested the U.S. economy continued to rack up hefty job gains. Private-sector payrolls increased by 202,000 in December, from 124,000 in the prior month in the ADP report.

See: Job creation seen tapering off in December amid tight labor market and slower economy

Read: U.S. jobless claims fall for 4th week in a row to 214,000, back near post-recession lows

What did market participants’ say?

“Payrolls should come in 150k-190k against the upper side of consensus at 180k. Just a normal number for December could send yields up 3-5bp this morning before they ease back before the weekend,” wrote Jim Vogel, an interest rate strategist at FHN Financial.