Benchmark yield climbs to two-month high after strong payrolls
Updates as of 1513 EDT
By Matt Tracy
Oct 4 (Reuters) -U.S. 10-year Treasury yields climbed to the highest in nearly two months on Friday after a stronger-than-expected September employment report further weakened the odds of big rate cuts at the Federal Reserve's remaining two meetings this year.
Nonfarm payrolls increased by 254,000 jobs in September, according to the Labor Department's Friday employment report. Economists polled by Reuters had forecast a rise of 140,000 after a 142,000 increase in August.
The benchmark 10-year Treasury yield US10YT=RR climbed to its highest since Aug. 9 and was last up 13.7 basis points (bps) at 3.981%.
The two-year U.S. Treasury yield US2YT=RR, which typically moves in step with interest rate expectations, posted its biggest daily gain since April 10 and roseto its highest since Sept. 3. It was last up 22.5 bps at 3.925%.
The September payrolls increase came alongside a 4.1% unemployment rate, slightly lower than August's 4.2%, and a tick up in hourly wages.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=RR, seen as an indicator of economic expectations, was last at a positive 5.5 bps, narrowing from 13.7 bps late on Thursday.
The market has oscillated over the size of an expected second rate cut at the Fed's November meeting. Despite a 50 bp cut last month, Fed officials have since signaled they are in no rush, a sentiment supported by Friday's strong labor figures.
Expectations for a 25 bp cut in November skyrocketed following the data, with markets pricing in a 99.8%chance versus 65% late on Wednesday, with a 0.2% chance of no cut at all priced in, according to CME's FedWatch tool
"Prior to today's numbers the question for the market was whether the FOMC would cut by another 50 bps in November or only by 25 bps," Eric Winograd, U.S. economist at asset manager AllianceBernstein, wrote in a Friday report.
"Now the question is whether they will cut at all or will instead skip a meeting."
Yields dipped earlier in the week when investors bought safe-haven Treasuries after Iran launched more than 180 missiles against Israel in escalating geopolitical tensions. Domestically, a dockworker strikeat U.S. ports which began Tuesday posed an inflation risk, but a deal was reached to end the action late on Thursday.
The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.16%,indicating the market sees inflation averaging about 2.2% a year for the next decade.
The U.S. dollar 5 years forward inflation-linked swap USIL5YF5Y=R, seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed's quantitative easing, was last at 2.471%.
Market participants pointed to consumer and producer price index inflation reports due next week, as well as the coming U.S. elections, as the next big question marks for the economy and interest rates.
"My view is the bond market is going to be rangebound until the elections," said Subadra Rajappa, U.S. rates strategist at Societe Generale.
"If you get a very strong (CPI) print, I think the market is definitely going to react. But for the most part I think the market reaction is going to be much more focused on misses."
In a Friday report, Bank of America economists Stephen Juneau and Jeseo Park wrote, "Inflation continues to move in the right direction, which will allow further cuts. However, we continue to think labor data matters more for size of cuts."
Jan Nevruzi, vice president of U.S. rates strategy at TD Securities, agreed that next week's inflation print is unlikely to sway the Fed's rates path.
"We still anticipate 50 bps of cuts - 25 bps at each of the next two meetings - by the end of the year," he said.
Monthly change in US jobs https://reut.rs/47QAQeR
Inflation gauges https://reut.rs/3NdVqMI
Reporting by Matt Tracy; Editing by Kirsten Donovan and Andrea Ricci
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.
