The Employment Cost Index rose 1% in the fourth quarter, down from a peak of 1.4% in the first quarter of 2022, while wages and salaries grew 1% compared with 1.3% in the previous quarter, according to the U.S. Bureau of Labor Statistics.
Home prices, meanwhile, rose 6.8% in November compared with the same time last year, and slowed from the 8.7% gain in October, according the S&P CoreLogic Case-Shiller Home Price composite index of 20 metropolitan areas. Consumer confidence, meanwhile, came in at 107.1 in January, below both consensus estimates of 109 and the revised December reading of 109, according to the Conference Board.
Tuesday's economic releases offered a "mixed round of information concerning the mindset of the consumer to start the new year, and one that demonstrates the headwinds facing households at this stage," said Benjamin Jeffery, a strategist on the U.S. Rates Strategy Team at BMO Capital Markets. Rising wages and housing costs have been chief concerns of the Federal Reserve in its battle with inflation. The central bank is widely expected to raise benchmark interest rates by 25 basis points to a range of 4.50% and 4.75% at the conclusion of its policy meeting on Wednesday.
"Softer data on housing prices, wages, and consumer confidence at the turn of the year demonstrate how the Fed’s rate hikes have cooled the economy," said Bill Adams, chief economist for Comerica Bank.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.9 basis points at 4.222%. It has fallen nearly 18 basis points since the start of January, the largest monthly drop since March 2020. The yield on 10-year Treasury notes was down 2.8 basis points to 3.524%. Yields had been down as much as 5.3 basis points earlier in the session The yield on the 30-year Treasury bond was down 0.6 basis point to 3.654%. Yields had dipped 3 basis points earlier in the day.
Bond yields move in the opposite direction of prices.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at -70.0 basis points.
January 31 Tuesday 1:49PM New York / 1849 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.575 4.6934 0.032
Six-month bills 4.655 4.8334 -0.016
Two-year note 99-209/256 4.2218 -0.039
Three-year note 99-220/256 3.9253 -0.043
Five-year note 99-90/256 3.6431 -0.040
Seven-year note 99-112/256 3.5916 -0.035
10-year note 104-236/256 3.5253 -0.026
20-year bond 103-8/256 3.7807 -0.010
30-year bond 106-64/256 3.6537 -0.006
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 27.75 0.00
spread
U.S. 3-year dollar swap 14.00 -0.50
spread
U.S. 5-year dollar swap 5.25 -0.75
spread
U.S. 10-year dollar swap -2.75 -0.50
spread
U.S. 30-year dollar swap -39.25 -1.50
spread
(Reporting by David Randall; Editing by Bernadette Baum, Andrea
Ricci and Jonathan Oatis)
