U.S. Treasury yields moved higher on Friday as investors considered the economic outlook for the new year amid a quiet trading week.
The 10-year Treasury yield rose by more than 2 basis points to 4.6%, while the 2-year Treasury gained 3 basis points to trade at 4.281%. Both yields were still down for the week.
Yields and prices move in opposite directions and one basis point is equal to 0.01%.
Investors are weighing the economic outlook for the year ahead, and a light economic calendar this week delivered a muddled picture.
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The ISM manufacturing PMI report for December on Friday showed an index reading of 49.3 for December. That is above expectations of 48.0, according to Dow Jones, but is still below the level of 50 that signifies expansion in the sector.
"The manufacturing job market continues to cool and is likely a signal of broader weakening in hiring activity. Investors should expect next week's payroll report to show sub-200k gains," Jeffrey Roach, chief economist for LPL Financial, said in a note Friday.
However, Thursday's initial jobless claims data for the week ending Dec. 28 showed a decline. It came in at 211,000, below economists' expectations of 225,000, per Dow Jones. This was down from a reading of 220,000 the previous week.
Money Report
The Treasury market is coming off a choppy year. The 10-year Treasury yield started out 2024 below 3.9%, then jumped to 4.7% in the spring, then fell again to below 3.7%, and ended the year at 4.5%.
In December, the Federal Reserve lowered interest rates by a quarter percentage point, but indicated that there would be fewer rate cuts in 2025.
Investors will watch closely as policymakers meet again in January to make decisions on monetary policy. Traders in the Fed funds futures market are expecting a pause in the next meeting, according to the CME FedWatch Tool.
Bond markets closed early Tuesday and remained closed Wednesday for New Year's Day.
