Treasury yields advance as jobs data shows layoffs remaining low

At 1 p.m. Eastern time, the U.S. Treasury will auction $24 billion of 30-year bonds, with investors hoping the sale is as well-received by the market as the previous day’s $40 billion 10-year sale.

Then, Federal Reserve Chairman Jerome Powell is expected to make an appearance on an International Monetary Fund panel at 2 p.m. One of the main questions for the market will be whether he pushes back against the recent easing of financial conditions.

Markets are pricing in a 90.5% probability that the Fed will leave interest rates unchanged between 5.25%-5.5% on Dec. 13, according to the CME FedWatch Tool. The chance of a 25-basis-point rate hike to a range of 5.5%-5.75% by January is seen at 17.8%.

What strategists are saying

Strong activity was seen during the overnight session, with volumes more than twice the recent trend, according to BMO Capital Markets strategists Ian Lyngen and Ben Jeffery.

“We see that the long bond garnered an impressive amount of activity, taking an above-average 7% market share,” they wrote in a note. “In outright terms, 30s saw overnight volumes at 2.7 times the typical levels, a dynamic that implies, if nothing else, there will be elevated investor interest paid to this afternoon’s refunding auction. Whether that translates into strong participation and robust demand is another question entirely.”