(New York = Yonhap Infomax) Correspondent Jeong Seon-young = US Treasury prices soared.
As non-agricultural employment indicators in February eased compared to January and the unemployment rate rose, US Treasury yields lowered their levels all at once.
However, the employment index exceeded Wall Street expectations and wages continued to rise, maintaining a solid job market.
According to Yonhap Infomax (screen number 6532), as of 8:40 a.m. on the 10th (hereafter Eastern Time), the 10-year government bond yield in the New York bond market was trading at 3.774%, down 14.60bp from 3:00 on the previous trading day.
The two-year yield, which is sensitive to monetary policy, was 4.704%, down 18.00bp from 3:00 the previous day.
The 30-year government bond yield was 3.772%, down 10.00bp from the 3 o’clock battle.
The gap between the 10-year and 2-year bonds slightly decreased from -96.4bp on the previous trading day to -93.0bp.
Treasury yields and prices move in opposite directions.
Bond market participants noted the sharp decline in the US employment data in February compared to January.
Nonfarm payrolls increased by 311,000 in February, a sharp decline from January.
The January figure was revised down to 504,000.
The unemployment rate was 3.6%, up from 3.4% the previous month.
US Treasury yields fell shortly after the February nonfarm payrolls report.
The yield on 10-year Treasury bonds lowered to 3.76% during the trading session, and the yield on 30-year Treasury bonds also fell to 3.75%.
The two-year yield fell to 4.65% during the intraday, reflecting the aftermath of the easing of US employment indicators.
The fact that the employment index, which was a surprise in January, has slowed to the 300,000 level and the unemployment rate has risen slightly, shows that the overheating of the job market can subside to some extent.
This gives the US Federal Reserve (Fed) more room to maneuver as it contemplates whether to speed up interest rate hikes again in light of stronger-than-expected economic indicators.
This is because if inflation indicators ease, there is no need to raise interest rates by 50bp.
In this way, the criticism that accelerating the rate hike again at a time when the pace of interest rate hike was reduced to 25 basis points is confirming a mistake can be allayed.
However, wages rose in February’s employment data.
The average hourly wage in February was $33.09, up $0.08 (0.24%) from the previous month. Average hourly wages increased by 4.62% year-on-year.
According to the results of the employment index, the outlook for a 50bp hike in March has been somewhat eased.
The Fed funds rate futures market reflected the possibility of a 25bp interest rate hike by the US Fed in March at 51.6% and a 50bp rate hike at 48.4%.
Compared to the previous day, the possibility of a 50bp hike was over 60%, which is a slight decrease.
Market participants are shifting their attention to the Consumer Price Index (CPI), which will be announced before the Federal Open Market Committee (FOMC) in March, as they must check inflation after checking the employment indicator.
“Some analysts will focus on the wages indicator, which is an important part of the Fed’s efforts to achieve more balance in the labor market,” said Tom Essay, founder of Seventh Report Research. Even if it did, it wouldn’t make the Fed any less hawkish when considering other inflation indicators.”
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This article was serviced at 23:08, 2 hours earlier on the Infomax financial information terminal.
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