S&P 500 loses post-election gains and Treasury yields rise as 256,000 positions added in December
A strong labour market has defied predictions of an economic slowdown or recession during US president Joe Biden’s time in office. Photograph: Getty ImagesThe US economy blew past expectations to create 256,000 jobs in December, sending yields on long-term US government debt to the highest since 2023 and wiping out the stock market’s gains since Donald Trump’s election victory.
The two-year Treasury yield, which tracks expectations for interest rates and moves inversely to bond prices, rose as much as 0.11 percentage points to 4.37 per cent. The 10-year yield climbed 0.09 percentage points to 4.77 per cent – the highest level since November 2023. “This number emphasises that the Fed does not need to rush...it validates to a significant degree that they should be on hold for a few months,” said Eric Winograd, chief economist at AllianceBernstein.Friday’s jobs data was hotly anticipated on both sides of the Atlantic amid a sell-off in government bond markets, fuelled in part by growing expectations that the Fed will cut interest rates only slightly in 2025.
US president-elect Donald Trump’s plans to cut taxes, impose tariffs and curb immigration have also led the Fed to signal it will be more cautious in 2025. The Fed began cutting its main interest rate in September, reducing it by 1 full percentage point by the end of 2024.
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