US Treasury bond yields jumped on Friday after data showed that employers added 336,000 jobs last September, which is nearly double what economists expected of 170,000 jobs… The stronger-than-expected report increases the chances of the reserve’s trend in… Federal Reserve (the US central bank) to further raise interest rates during the current year.
By 12:40 GMT, standard 10-year bonds had risen to 4.84 percent, from a level of about 4.75 percent before the data was released, noting that they reached 4.884 percent on Wednesday, the highest level since 2007.
Two-year bonds rose to 5.14 percent, from about 5.06 percent before the data was released. It is still stable below the level of 5.202 percent recorded last September 21, which was the highest since July 2006… The closely watched yield curve between two-year and ten-year bonds has changed little at negative 30 basis points.
The report issued by the Labor Department on Friday showed that employment last month jumped from an increase of 227,000 jobs in August. So far, the economy has added an average of 266,000 jobs per month in the past three months. The unemployment rate was unchanged at 3.8 percent.
The labor market successfully defied a range of threats this year, most notably high inflation and a rapid series of federal interest rate increases that were intended to overcome inflation. Although the Fed’s increases made loans much more expensive, steady job growth helped fuel consumer spending and kept the economy growing.
Surveys by the Institute for Supply Management, a trade group for purchasing managers, found that manufacturing and service companies continued to add jobs last month. Among banks, restaurants, retailers and other service sector companies, hiring accelerated in September compared to August.
The September employment report comes as the Fed sifts through all incoming economic data to decide whether it needs to raise its benchmark interest rate again this year, or instead leave it high until 2024.
Following the publication of the report, investors and analysts increased their bets that the Federal Reserve will raise interest rates before the end of the year and keep them high for a longer period next year.
The odds currently indicate that at 50 percent, the Fed will raise interest rates by a quarter of a percentage point to a range between 5.50 and 5.75 percent at its meeting in December, knowing that these odds did not exceed 34 percent before the publication of the jobs report.
Following the publication of the report, future trading indicators fell sharply on Wall Street, while the dollar index rose strongly, increasing 0.6 percent to 106.96 points. Against the yen, the dollar rose 0.7 percent to 149.46 yen.
With the rise of the dollar, the euro headed on Friday to record a record decline for the twelfth week against the dollar, making this series of declines the longest since the launch of the single European currency in 1999.
For its part, euro zone bond yields followed their American counterparts in rising, while the gap between German and Italian borrowing costs reached its highest levels since March.
The yield on 10-year German bonds, the euro zone’s benchmark, rose in the latest reading by 5 basis points to 2.93 percent by 13:15 GMT, below the 12-year high of 3.024 percent reached on Wednesday.
The yield, which rises as bond prices fall, was on track for its fifth straight weekly gain despite falling over the last two sessions.
The closely watched gap between Germany and Italy’s 10-year yields reached 202 basis points, after briefly widening to 204.6 basis points, the highest level since early January.
The Italian 10-year bond yield rose 7 basis points to 4.97 percent, after briefly rising above 5 percent.
Long-term bond yields have risen since September; Investors were quick to offload bets that central banks would soon be forced to cut interest rates as economies slow.
2023-10-06 14:23:56
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