Bond Yield Movements

The bond yields experienced mixed movements on Friday as investors awaited the release of the pivotal jobs report.

Key Yield Movements

  • The 2-year Treasury yield reached 4.93%, marking an increase of 3.8 basis points. It’s important to note that yields and prices move in opposite directions.
  • Conversely, the 10-year Treasury yield stood at 4.18%, showing a slight decline of 0.1 basis points.
  • The 30-year Treasury yield came in at 4.29%, experiencing a reduction of 0.9 basis points.

Market Drivers

The plunge in the long-end of the curve during this week has been influenced by indicators of a strong growth rate in the U.S. economy. On Thursday, the 10-year yield shot up by 11 basis points, reaching its highest level since November 7, 2022. Additionally, the 30-year yield peaked at its highest point in 10 months.

The Awaited Jobs Report

Investors’ opinions on the state of the U.S. economy will be tested with the release of the July jobs report at 8:30 a.m. Eastern Time. Based on surveys conducted among economists by the Wall Street Journal, expectations reveal that around 200,000 jobs are predicted to be created, leaving the unemployment rate unchanged at 3.6%. Furthermore, there is an estimated growth of 0.3% in average hourly earnings.

Tim Waterer, Chief Market Analyst at KCM Trade, emphasizes that any positive surprises in the labor market could lead to further tightening by about 25 basis points. While a job creation figure around 200k for July would satisfy the market, exceeding 250k could result in higher yields and a stronger U.S. dollar.

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