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Treasury yields jump after US jobs report smashes expectations

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Treasury yields jump after US jobs report smashes expectations

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The US economy blew past expectations to create 256,000 jobs in December, sending yields on US government debt lurching higher as traders and banks trimmed their forecasts for Federal Reserve interest rate cuts.

The figure from the Bureau of Labor Statistics on Friday exceeded the consensus forecast from economists polled by Reuters of 160,000 and was above the downwardly revised 212,000 positions added in November.

Treasury yields climbed as investors bet the Fed will be slower to cut interest rates this year. Futures markets pushed back the expected timing of the first quarter-point rate cut to September from June before the data release. The odds of a second cut this year fell to about 20 per cent from roughly 60 per cent.

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Bank of America went further on Friday, saying the “gangbusters” jobs reports suggests “the cutting cycle is over”.

The Wall Street bank added “the conversation should move to hikes, which could be in play” if inflation picks up significantly. Goldman Sachs on Friday also scaled back its forecasts for 2025 rate cuts from three quarter-point reductions to two.

The robust jobs figures sent US government bond yields rising across the spectrum. The benchmark 10-year yield climbed 0.08 percentage points to 4.76 per cent — the highest level since November 2023. The policy-sensitive two-year yield soared 0.12 percentage points to 4.38 per cent.

Wall Street stocks dropped, with the broad S&P 500 closing down 1.5 per cent and the tech-heavy Nasdaq Composite losing 1.6 per cent. The S&P 500 fell to its lowest since the November 5 US election.

Eric Winograd, chief economist at AllianceBernstein, said: “[December’s jobs] number emphasises that the Fed does not need to rush . . . it validates to a significant degree that they should be on hold for a few months.”

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The bond market was already “on edge”, he added.

Friday’s jobs data was hotly anticipated on both sides of the Atlantic amid a sell-off in government bond markets, fuelled in part by growing expectations that the Fed will cut interest rates only slightly in 2025.

UK chancellor Rachel Reeves has come under increasing pressure this week after government borrowing costs soared, leaving her with little scope to meet her self-imposed fiscal rules.

UK bond yields climbed after the publication of the US jobs figures. The 10-year gilt yield rose to 4.85 per cent, 0.02 percentage points higher on the day, but below the 16-year high of 4.93 per cent hit earlier this week.

US president-elect Donald Trump’s plans to cut taxes, impose tariffs and curb immigration have also led the Fed to signal it will be more cautious in 2025.

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The central bank in December forecast just two quarter-point rate cuts this year, compared with a projection of four in September, partly because of persistent strength in the jobs market.

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Jeff Schmid, a top Fed official, on Thursday said the US central bank was “pretty close” to meeting its objectives on inflation and employment, underscoring expectations that policymakers will refrain from sharp interest rate cuts this year.

The Fed began cutting its main interest rate in September, reducing it by 1 full percentage point by the end of 2024.

At its next meeting later this month, the central bank is widely expected to keep interest rates steady at its target range between 4.25 per cent and 4.5 per cent.

Tom Porcelli, chief US economist at PGIM Fixed Income, said: “I think the Fed is feeling very good right now about taking a pass at the coming meeting — and obviously, if this kind of strength persists, they’ll take a pass at the next several meetings.”

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Friday’s figures showed the unemployment rate was 4.1 per cent, compared with 4.2 per cent in November. They marked the last monthly jobs numbers released under Joe Biden’s presidency, during which the US economy created 16.6mn jobs.

An exceptionally strong labour market that defied frequent predictions that a sharp slowdown or recession was looming was a defining feature of the economy under Biden’s watch.

But politically it did not help the Biden administration because those gains were undercut by the inflation surge that peaked in the summer of 2022, sharply raising the cost of living for households throughout his tenure.

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Waymo called the cops on teen riders, raising privacy concerns

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Waymo called the cops on teen riders, raising privacy concerns

A Waymo robotaxi drives in San Francisco’s North Beach neighborhood this week.

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Police in San Mateo, Calif., posted Monday on social media that they had apprehended a pair of teenagers from a Waymo driverless robotaxi after the company alerted authorities to suspected criminal activity. It’s the latest incident involving video surveillance of passengers and others by autonomous vehicles — raising questions about the limits of privacy in such vehicles.

The Facebook post by the San Mateo County Police said: “Parents do you know where your teens are? @waymo does!”

The 15-year-olds were allegedly drinking alcohol and shooting toy guns from the car, according to the police. They said Waymo’s systems detected behavior that then triggered a safety response, after which the company disabled the vehicle and contacted police.

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Waymo’s cars, equipped with an array of cameras, microphones and other sensors to monitor passengers and other nearby vehicles, are becoming more common in cities across the United States. Experts say the detention of the two teens in San Mateo highlights a potential — but not inevitable — trade-off between privacy and convenience. It also questions the extent to which companies similar to Waymo are required to hand over private data, including audio and video of passengers, in situations where a crime is suspected.

NPR reached out to Waymo, which is owned by Alphabet, the parent company of Google, for comment on the details of the San Mateo incident and how the company responded, but did not hear back. But on its website, the company says that as many as 29 cameras in its autonomous cars provide an all-around view and “are designed with high dynamic range and thermal stability, to see in both daylight and low-light conditions, and tackle more complex environments.”

“There already exist laws that govern duty to report or even duty to protect” for carriers such as Waymo, according to Alessandro Acquisti, a professor of information technology at the MIT Sloan School of Management. “The privacy problems arise when and if driverless carrier companies used such laws or ethical obligations as a pretext for blanket, indiscriminate accumulation of identifiable data for unspecified future purposes.”

That includes not just monitoring people inside the cars, but outside too. Take, for example, a hit-and-run investigation last year in Los Angeles. Media reported that the police inquiry was aided by video captured by a Waymo taxi that had a clear view of the crime. Critics suggested at the time that authorities were using the company’s vehicles as a mobile surveillance platform. And during 2025 protests in Los Angeles against Immigration and Customs Enforcement crackdowns, demonstrators vandalized Waymos, apparently angry that video recorded by the vehicles could be used by police, although there is no evidence that happened.

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Trump fires last members of election commission, inciting fears of midterm ‘chaos’

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Trump fires last members of election commission, inciting fears of midterm ‘chaos’

Donald Trump has terminated the remaining members of the independent, federal commission that assists election administration officials nationwide just a few months before the midterm elections, multiple outlets reported Thursday.

The remaining three commissioners of the four-member bipartisan commission ⁠were forced out on Thursday in different ways. The one Republican appointee resigned and the other ⁠two, Democratic appointees were notified of their terminations via email from ​the White House presidential personnel office.

“On ‌behalf of President ‌Donald J Trump, I am writing to inform you that your position ‌as Commissioner of the Election Assistance Commission is terminated, effective immediately. Thank you for your service,” the email, seen by Reuters, said.

The White House did not immediately respond to a request for comment.

The Election Assistance Commission serves as a “national clearinghouse of information on election ‌administration”, accredits testing laboratories and certifies voting systems, and maintains the national mail-voter registration form developed by the National ​Voter Registration Act of 1993, according to the commission’s website. The terminations follow Trump and top administration officials’ advocacy to change vote-by-mail requirements and investigations into the 2020 election outcome, which Trump lost to Democrat Joe Biden.

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“It is ⁠irresponsible and dangerous that this Administration remains dead set on ​causing chaos for ​our election officials across this ​country,” Arizona secretary of state Adrian Fontes said in a ​Thursday statement. “This ‌move undermines the integrity ​of nonpartisan ​election administration.”

The 2002 law that established the commission, the Help America Vote Act, states the president can appoint replacements to the commission.

It is unclear how Trump will move ahead with the commission.

Reuters contributed reporting

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Former Olympian pleads not guilty in reflecting pool vandalism charges

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Former Olympian pleads not guilty in reflecting pool vandalism charges

Former U.S. Olympian David Hearn (left) walks with his attorney Norman Eisen to speak to reporters and protesters gathered after his arraignment at the Superior Court of the District of Columbia in Washington, D.C. on Thursday.

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Former U.S. Olympic canoeist David Hearn pleaded not guilty to damaging the Lincoln Memorial Reflecting Pool in D.C. Superior Court Thursday morning.

Federal prosecutors charged Hearn with a single count of destruction of property causing more than $1,000 in damage to the pool.

Hearn has previously claimed, which his attorneys repeated during a short press conference outside the court, that he simply touched the water in the pool out of curiosity.

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The Trump administration had just completed a $14 million renovation of the pool.

But shortly after the work finished, peeling paint and algae gathered in the water. The remodel has been largely criticized as a massive failure and waste of taxpayer dollars.

Superior Court Judge Carmen McLean released Hearn on his own recognizance. His next hearing is scheduled for Aug. 5.

Norm Eisen, one of Hearn’s attorneys, spoke to reporters outside of court following the hearing. He said the administration is using Hearn as a “scapegoat … for their own failures.”

“It is not a crime to touch the reflecting pool, to touch water in the United States of America,” he said.

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Prosecutors say there is a host of evidence against Hearn.

This is a developing story.

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