Treasury yields pull back from near 10-month highs after jobs data

What’s happening

• The yield on the 2-year Treasury
  BX:TMUBMUSD02Y
  fell 5.4 basis points to 4.846%. Yields move in the opposite direction to prices.

• The yield on the 10-year Treasury
  BX:TMUBMUSD10Y
  was 4.159%, down 2.9 basis points.

• The yield on the 30-year Treasury
  BX:TMUBMUSD30Y
  was 4.269%, down 3.2 basis points.

What’s driving markets

The U.S. economy added 187,000 jobs in July, the Labor Department said. Economists had looked for an increase of 200,000. Jobs gains for June and May were also revised lower.

The unemployment rate, however, ticked down to 3.5% from 3.6%, while average hourly earnings rose 0.4%, for a 4.4% year-over-year gain, which was stronger than expected.

Treasury at the long end of the curve has tumbled in value this week on signs the U.S. economy is still growing at a solid clip. The 10-year yield surged by 11 basis points on Thursday, taking it to the highest level since Nov. 7, 2022. The 30-year yield also reached the highest level in 10 months.

What analysts are saying

“This jobs report is definitely not a gamechanger,” said Seema Shah, chief global strategist at Principal Financial Management, in a note.

“The Fed still has another report to come before their next meeting but, if no clear direction emerges, the Fed is likely to stay put,” she said. Federal Reserve Chair Jerome Powell “seems to need a very compelling reason to hike again so, with the hurdle so high, it would likely take a meaningful upside surprise to both job gains and wage growth to prompt Fed action in September.”