10-year Treasury yield slips after non-farm payroll data
Updates market activity, adds analyst quote
By David Randall
NEW YORK, July 5 (Reuters) -Benchmark 10-year Treasury yields slid Friday following closely-watched jobs data that appeared to show the U.S. labor market weakening, strengthening market expectations that the Federal Reserve will begin to cut interest rates in September.
Non-farm payrolls grew by 206,000 jobs in June, slightly higher than the 190,000 new jobs estimated by economists polled by Reuters. Estimated job growth for May, meanwhile, was revised down to 218,000 new jobs from 272,000, while April's job growth was revised down to 108,000 new jobs from a previous 165,000.
The unemployment rate rose to 4.1%, slightly higher than the estimated 4.0%.
The labor market has been a key focus for the Federal Reserve in its debate over when to begin cutting interest rates from nearly two-decade highs. The central bank has cited the resiliency of the jobs market as a potential catalyst for a possible resurgence in inflation.
"This was not a terrible report but with the large revisions it shows there are cracks and weaknesses under the surface," said David Wagner, a portfolio manager at Aptus Capital Advisors. "This keeps the (Fed's) September meeting a live meeting for a rate cut."
Futures markets are now pricing in a roughly 71% chance for a 25 basis point rate cut at the Fed's meeting that concludes September 18th, up from a 57.9% chance seen a week ago, according to CME's FedWatch Tool. Overall, markets are pricing in a cumulative 50 basis points in interest rate cuts by the end of the year.
"The downward revisions to the previous two months is consistent with an economic slowdown," said Jeffrey Roach, chief economist for LPL Financial. "We should expect more rhetoric out of the Fed about labor market conditions and the importance of keeping policy appropriate for their dual mandate."
The yield on the benchmark U.S. 10-year Treasury note US10YT=RR fell 6.5 basis points to 4.282%, leaving it down approximately 15 basis points for the week and near its lowest levels since late June.
The yield on the 30-year bond US30YT=RR fell 4.2 basis points to 4.478%.
The two-year US2YT=RR U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 7.7 basis points to 4.616%
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 at a negative 33.6 basis points.
Reporting by David Randall; Editing by Andrew Heavens, Chizu Nomiyama and David Evans
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
