The new US job data drove the treasury prices to two month high on Thursday, even as the investors decided that a monthly jobs report didn’t show enough economic acceleration to shift the Federal Reserve’s monetary policy outlook.
The market analysts have been hopeful of positive indications of uphill economic growth. They hoped that the fast pace of growth would have forced the central bank to hike its key interest rates sooner and quicker than once thought.
A Labor Department report, released on Thursday, showed that an above-consensus 288,000 new jobs were added in June, but it wasn’t enough to rethink current low-rate views.
The 10-year Treasury note yield, which rises as prices fall, surged 1.5 basis points on the day at 2.645 percent, despite climbing to an intraday high of 2.685 percent.
The difference between the 30-year bonds yield and the 5-year note yield narrowed as they rose 1 basis point to 3.479 percent and 2.5 basis points to 1.737 percent respectively.
US job data report
The employment growth in the United States surged in June, suggesting decisive evidence to the growing economy after a surprisingly big slump at the start of the year. The unemployment rate, however, closed in on a six-year low.
According to the Labor Department report, nonfarm payrolls increased by 288,000 jobs last month and the jobless rate fell to 6.1 percent, its lowest level since September 2008.
Steven Ricchiuto, chief economist at Mizuho Securities: At the end of the day you can’t get consumer spending unless you have income growth. I believe the data means the 10-year Treasury yield won’t be able to push through its recent trading ceiling of 2.75 percent in the near-term.
Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities: The dip buyers are in after the data and while we have followed this thought process over the last four employment reports, looking for the sell-off into payrolls and yield highs shortly after the actual print, we do think this time is different. Technically and fundamentally, we expect yields to start a gapping process higher over coming weeks and months, led by the 2-3 year sector where we think the biggest carry and roll-down trade is positioned.
Jacob Oubina, senior US economist at RBC Capital Markets in New York: It’s an extremely bullish report. It’s a report that really checks off all the positive boxes. I don’t think you could have asked for a stronger read.
Jason Rogan, managing director of U.S. government bond trading in New York at Guggenheim Securities LLC: There is no doubt it is a very good number and the market is now pricing in a better than expected NFP. The 24 hour window is creating a rush to sell Treasury bonds.
Dan Mulholland, head of U.S. Treasury trading at BNY Mellon Capital Markets LLC: The correlation has been “loose” between the ADP and NFP reports. The latter include hiring from both the private and public sectors. If Thursday’s report showed 300,000 jobs growth, Treasury bonds would sell off more and the 10-year yield would climb above 2.7 percent.