An upward surprise in this week's major economic indicators without strong central bank buying of Treasuries could result in pushing yields of the 10-year Treasury note past the 4.25% mark to 4.26%, according to government bond market strategists. The 10-year yielded 4.20% on Nov. 23.
Two indicators are due this week: the November non-farm payrolls and the Institute for Supply Management Index, which the consensus expects will indicate a slight uptick from last month's reading of 56.8. "An ISM reading of 60 or more, with strong component figures for inflation and employment, would drive up yields on the 10-year Treasury," said Josh Stiles, senior bond strategist at IDEAglobal.
Although economists were surprised by October's non-farm payroll figure of 337,000, consensus is looking for a strong November figure of 200,000. "November has historically been a strong month for employment in election years, whether it's because of hotels, advertising or the campaigns themselves hiring," according to Dean Maki, economist at JPMorgan Chase. Maki's forecast is for 225,000 new jobs to be added.
