Friday’s results for the long-term U.S. official Friday have been at unprecedented levels since early June, and the two-year Treasury has reached a March 2020 high as sales on bonds that began in late September have accelerated.
Expected weak reports from non-farm-pay-rolls, however, could lead to quiet yields in the short term.
What the yield is doing
10 year Treasury Note TMUBMUSD10Y,
Last Thursday at 3pm it was 1.571% compared to 1.570%, representing its highest rate since June 7th.
2 year Treasury Note TMUBMUSD02Y,
Was 0.294%, 0.307% the day before, which represents a 52-week high for the note and is the highest since March 25, 2020.
TMUBMUSD30Y produces 30 years of Treasury bonds,
2.142%, compared to 2.132% on Thursday, the highest rate since June 25, according to Dow Jones market data.
For the week, 2-year yields rose 5.4 basis points, while 10-year Treasuries gained 11.8 basis points and 30-year or longer bonds gained 10.3 basis points, factset data shows.
What is driving the market?
The Labor Department’s September report found that 194,000 new jobs were created each month, marking the second consecutive disappointing growth, and that labor shortages could be an obstacle to an otherwise strong U.S. economic recovery.
Analysts were debating whether the expected weak report would delay the Federal Reserve’s plan. Economists surveyed by The Wall Street Journal expected that 500,000 new jobs would be added to the United States this month.
August job gains increased from 235,000 to 366,000, official data shows.
And the report further found that the unemployment rate has dropped from 5.2% to 4.8%, which is going to reduce the epidemic. Yet government rates devalue real unemployment by a few percentage points, economists speculate.
Some analysts say a lighter job in the ledger, however, could force the Federal Reserve to announce plans in November to bring back the epidemic-era stimulus, which has seen the central bank buy 120 120 billion a month in the Treasury and mortgage-backed securities.
The prospect of the Fed reducing its bond purchases has played a significant role in recent progress in bond production but investors can also see how much wages have risen as an indicator of inflation.
The U.S. average hourly earnings rose 19 cents, or 0.6%, to .8 30.85, higher than the previous month’s 0.6% growth and 0.4% growth forecast. High wages reflect the company’s willingness to pay more when there is a shortage of labor.
The labor market report comes as Washington delays a federal default after a Senate vote on Thursday voted to raise the government’s debt limit in December. This is a short break because lawmakers must return to the negotiating table before the end of the year.
What analysts are saying
Brad Macmillan, chief investor, said: “The good news for the market is that this weak report makes it less likely that the Fed will start the tapping process by extending the debt extension deadline shortly after the next Fed meeting.” Officers of the Commonwealth Financial Network. “One of the main concerns of the market is the high rate, and in this case the news of bad employment could provide additional support for the markets if the Fed delays.”