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The policy-sensitive 2-year Treasury yield fell Friday morning after August’s nonfarm payrolls data showed June-July job gains were less than originally reported.
What’s happening
-
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was 4.795%, down 6.2 basis points from 4.857% on Thursday. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 4.099%, up less than 1 basis point from 4.090% as Thursday afternoon. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was 4.242%, up 3.9 basis points from 4.203% late Thursday.
What’s driving markets
Friday’s data showed that the U.S. created a higher-than-expected 187,000 new jobs in August. However, the unemployment rate rose to 3.8% from 3.5%, and job gains were much weaker than originally reported for July and June.
Investors focused on the parts of the report that supported a cooling labor market, such as the June-July revisions and rising unemployment rate. Short-dated Treasury yields dropped the most as fed funds futures traders boosted the likelihood of no further Federal Reserve interest rate hikes this year.
What analysts are saying
“Overall, we’re interpreting this as further evidence of the effectiveness of Powell’s efforts to create more balance in the U.S. labor market — with a risk that the downside accelerates in the coming months,” said BMO Capital Markets strategist Ian Lyngen.
“Monetary policy implications are relatively straight forward — it just got a lot harder to justify a hike in Q4,” Lyngen wrote in a note. “September is off the table, even if there is a modest upside surprise in the August CPI series. .”
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