TREASURIES-US Treasury yields rise as traders await key jobs data

By Karen Brettell

Jan 6 (Reuters) - U.S. Treasury yields edged higher on Tuesday as traders waited on key jobs data this week to offer new information on the strength of the U.S. labor market and as companies increased issuance of corporate debt.

The effects of the record 43-day federal government shutdown are beginning to wear off, which will provide more reliable economic releases this week. The Job Openings and Labor Turnover Survey (JOLTS) on Wednesday and Friday’s jobs report for December are this week’s main releases.

“We're expecting to see an uptick in volatility as some of this data starts to come out in a more regular stream from what had been a very complacent time period to finish 2025,” said Zachary Griffiths, head of investment-grade and macro strategy at CreditSights in Charlotte.

Friday’s data is expected to show that employers added 60,000 workers in December, according to the median estimate of economists polled by Reuters. The unemployment rate is also expected to decline to 4.5%, after an unexpected increase to a four-year high of 4.6% in November.

Weaker-than-expected jobs gains could send yields lower, with 10-year Treasury yields heading back toward the 4% area, said Griffiths.

“We're looking for an economic growth slowdown quite a bit more than consensus in 2026, which is driven by a weaker labor market, allowing the Fed to cut more and pushing yields lower and the curve steeper.”

The yield on benchmark U.S. 10-year notes US10YT=RR was last up 1.6 basis points on the day at 4.179%. The yield is trading near the top of the range it has held in since early September.

The 2-year note US2YT=RR yield, which typically moves in step with Fed rate expectations, rose 2.1 basis points to 3.476%.

The yield curve between two- and 10-year yields US2US10=TWEB flattened by around one basis point to 70 basis points after earlier reaching 72.2 basis points, the steepest since April.

Stephen Miran, a Federal Reserve governor whose term ends at the end of January, said on Tuesday the U.S. central bank needs to cut interest rates aggressively this year to keep the economy moving forward.

Meanwhile, Richmond Fed President Tom Barkin said on Tuesday further Fed interest rate changes will need to be "finely tuned" to incoming data given risks to both the Fed's unemployment and inflation goals.

Fed funds futures traders are pricing in only a small chance of a cut at the Fed's meeting this month, and roughly 50/50 odds of a cut in March.

Bonds could come under pressure on heavy corporate debt issuance, with January typically being a busy month for the corporate debt market.

Traders are also watching for any escalation in geopolitical tensions after the United States took Venezuelan leader Nicolas Maduro into custody.

Leaders from major European powers and Canada rallied behind Greenland on Tuesday, saying the Arctic island belongs to its people, following a renewed threat by U.S. President Donald Trump to take over the Danish territory.