FX.co ★ Treasury Yields Lower After Jobs Report

The yield on the US 10-year Treasury note slipped about 2 basis points to 4.46% on Thursday after a weaker-than-expected jobs report led investors to scale back expectations for Federal Reserve rate hikes this year. The US economy added only 57K jobs in June, and payroll figures for April and May were revised lower. At the same time, the unemployment rate unexpectedly dipped to 4.2%, a move largely driven by a decline in the labour force participation rate. Overall, the data signalled a cooling labour market in June. Market pricing now implies roughly a 50% probability of a Fed rate hike in September, down from about 64% the previous day. Meanwhile, Fed Chair Kevin Warsh said at the ECB Forum this week that inflation expectations had eased over the past month, indicating there is no immediate need to raise interest rates, while reaffirming the central bank’s commitment to restoring price stability.