Bond yields remained steady on Friday as investors eagerly anticipated the release of the latest jobs report. This report would provide valuable insights into the current state of the economy, indicating whether it remains robust or is on the verge of faltering.
What’s Happening
- The yield on the 2-year Treasury TMUBMUSD02Y, 4.994% stood at 4.99%, experiencing a decrease of 1.6 basis points. It’s worth noting that yields move inversely to prices.
- Meanwhile, the yield on the 10-year Treasury TMUBMUSD10Y, 4.055% rose by 1.1 basis points, reaching 4.05%.
- Additionally, the yield on the 30-year Treasury TMUBMUSD30Y, 4.009% increased slightly by 0.1 basis points, landing at 4.01%.
Driving Market Forces
Thursday witnessed the yield on the 2-year Treasury surpassing 5%, reaching its third-highest level of the year. Simultaneously, the yield on the 10-year Treasury rose above 4%, its highest point since March.
These developments were spurred by several factors, including the ADP’s private-sector payrolls report showing signs of strength in the labor market. Additionally, robust sentiments in the services sector and the Federal Reserve’s minutes expressed a hawkish stance that further influenced market trends.
Althea Spinozzi, senior fixed income strategist at Saxo Bank, commented on this bond market rally: “With a resilient job market and elevated inflation, investors are increasingly anticipating a rate cut in the future. As a result, U.S. Treasury yields across the curve, especially in the belly section, have risen.”
According to economists surveyed by The Wall Street Journal, expectations for June’s payroll growth indicate a slowdown to 240,000 from the previous month’s 339,000. Furthermore, the unemployment rate is predicted to ease to 3.6%, with hourly wages expected to grow by 0.3%.
