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Treasury yields drop after July job losses dent Sept hike odds
The 2-year note yield slid 4.4 basis points to 4.202%, while Fed funds futures cut September hike odds to 44% from 55% after the weaker hiring print.
U.S. Treasury yields fell on Friday after jobs data showed employers unexpectedly shed 23,000 positions in July, leading traders to reduce the odds of a Federal Reserve rate hike in September, according to Reuters.
The report also showed the unemployment rate easing to 4.1% while labor participation declined, and average hourly earnings rising 3.2% year over year, below the expected 3.5% increase. Reuters noted that investors pulled back from an earlier drop in yields ahead of upcoming July consumer price inflation and supply for longer-dated Treasuries.
Reuters reported that the 2-year note yield fell 4.35 basis points to 4.202% and briefly reached 4.1536%, its lowest level since July 17. Fed funds futures now price 44% odds of a September hike, down from 55% before the data, though traders still see a 77% probability of a rate increase by December.
The weaker labor market was viewed as taking the Fed off the hiking table, Reuters added, even as stubborn inflation risks remain. The next week includes Treasury sales totaling $125 billion in coupon-bearing debt, with $58 billion in 3-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds.