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Treasury yields rise as traders continue to bet on a December rate cut

CNBCDecember 04, 2025 at 11:35 PMFull Content
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U.S. Treasury yields rose as traders bet on a December Fed rate cut, driven by mixed labor market data and expectations of monetary easing.

LLM Summary

Treasury yields climbed across the curve—10-year to 4.102%, 30-year to 4.761%, and 2-year to 3.523%—amid conflicting labor data. While jobless claims fell, ADP reported a surprise drop in private payrolls, fueling expectations of a Fed rate cut. The CME FedWatch Tool shows nearly 90% confidence in a 25-basis-point rate cut at the December meeting.

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Traders work as the market opens on the floor of the New York Stock Exchange (NYSE) on November 18, 2025 in New York City.

Spencer Platt | Getty Images

U.S. Treasury yields moved higher on Thursday as investors looked at the latest layoff numbers for November and weekly jobless claims, and continued to expect an interest rate cut at the Federal Reserve's meeting next week.

The 10-year Treasury yield rose more than 4 basis points to 4.102%, while the 30-year Treasury yield was up more than 3 basis points to 4.761%. The 2-year Treasury yield was higher by more than 3 basis points to 3.523%.

One basis point is equal to 0.01% and yields and prices move in opposite directions.

Investors have been studying signs of a weaker labor market this week. Announced job cuts from U.S. employers in November moved further ahead of 1 million for the year as corporate restructuring, artificial intelligence and tariffs have helped pare job rolls, consulting firm Challenger, Gray & Christmas reported Thursday.

On Wednesday, payroll processor ADP reported a surprising decline in private payrolls, with companies cutting 32,000 workers against an estimate from economists polled by Dow Jones that had called for growth of 40,000 in November.

Investors looked past a Labor Department report Thursday showing that jobless claims for the week ended Nov. 29 fell to 191,000, the lowest since September 2022, and 27,000 less than the previous period. Economists had expected new jobless claims of 220,000 in the latest week.

"The latest week for claims data included the Thanksgiving holiday, and holidays often distort claims data, so this release should be taken with a big grain of salt," said Bill Adams, chief economist at Comerica Bank.

The reports added to the widespread view that central bank policymakers will cut interest rates at the Federal Open Market Committee meeting that wraps up on Dec. 10. Interest rate futures trading shows almost a 90% conviction that the Fed will ease monetary policy by a quarter-percentage point, according to the CME FedWatch Tool.

"The Fed isn't happy to see inflation overshooting their target for a fourth year running. But Fed policymakers are likely to see larger risks to the job market than to inflation," Adams also said, noting that he anticipates the central bank will cut rates by a quarter percentage point at its final meeting of the year.

The Institute for Supply Management service sector survey of purchasing managers for November, released Wednesday, boosted hopes that the U.S. economy is holding steady, rising slightly to 52.6% and above a Dow Jones estimate from economists of 52.5%.

Other major economic reports still to be reported this week include the delayed personal consumption expenditures index report for September and the Michigan consumer sentiment expectations on Friday.

— With additional reporting from CNBC's Jeff Cox