U.S. Treasury yields declined on Thursday during a shortened trading session, as a recent bond selloff showed signs of easing. Meanwhile, stock index futures dipped slightly, reflecting the ongoing volatility in Wall Street's early 2025 trading.
Market Closures and Futures Performance
The U.S. stock market remained closed in observance of a national day of mourning for former President Jimmy Carter. Bond markets are set to close early at 2:00 PM ET.
S&P 500 futures (SPX): down 0.20%
Nasdaq 100 futures (US100:IND): down 0.13%
Dow futures (INDU): down 0.28%
Treasury Yield Movements
The U.S. 10-year Treasury yield (US10Y) fell by 5 basis points to 4.66%, retreating from levels last seen in November 2023. The 2-year Treasury yield (US2Y) also eased, dropping 3 basis points to 4.27%.
Insights from JPMorgan Analysts
JPMorgan analysts Jay Barry, Jason Hunter, and Phoebe White noted that trading activity was expected to be light due to the market closures and the impending December employment report.
Market Recap: Previous Session
U.S. equities had a volatile session on Wednesday, closing with mixed results:
S&P 500 (SP500): up 0.16% to 5,918.23 points
Dow Jones Industrial Average (DJI): up 0.25% to 42,635.20 points
Nasdaq Composite (COMP:IND): down 0.06% to 19,478.88 points
Key Concerns and Fed Policy
Investor sentiment remains pressured by concerns over potential inflationary impacts from incoming President Donald Trump's policies. Additionally, the Federal Reserve has signaled a slower pace of interest rate cuts.
The minutes from the Fed's December meeting indicated that the committee members were closely considering when to slow the pace of policy easing. Elevated uncertainty remains about the effects of potential changes in trade, immigration, fiscal, and regulatory policies on the economy.
Fed Meeting Highlights
The decision to cut rates in December was described as "finely balanced."
Expected tariffs contributed to a revised higher inflation forecast.
No forward path for balance sheet policy was discussed, though the end of balance sheet runoff is anticipated by June 2025.
Focus on Upcoming Jobs Report
Market participants will turn their attention to Friday’s December nonfarm payrolls report, which is expected to provide key insights into the labor market's resilience. This data could influence expectations regarding the Federal Reserve’s future rate cuts.
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