Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Treasury Yields Rise as Employment Data Keep Fed Hikes in Play

Published 10/07/2022, 09:37 AM
Updated 10/07/2022, 11:18 AM
Treasury Yields Rise as Employment Data Keep Fed Hikes in Play

Treasury Yields Rise as Employment Data Keep Fed Hikes in Play

(Bloomberg) -- Treasury yields rose to new weekly highs after resilient US job creation and wage gains during September were seen as keeping the Federal Reserve on a tighter policy track.

The policy-sensitive two-year climbed nearly nine basis points to 4.34% -- within a basis point of a multiyear high -- and the swap contract for the November Fed meeting priced in 73 basis points of tightening. The five-year yield climbed as much as 10 basis points to 4.17%, anticipating the policy rate will remain elevated for an extended period. 

“The jobs number points to another hike of 75 basis points next month, the labor market looks solid and it’s tough to see a chink in the armor of economic data at the moment,” said Kevin Flanagan, head of fixed-income strategy at Wisdom Tree. 

The market-implied expectation for where the policy rate will peak also increased, with the derivative contract for the March Fed meeting trading around 4.65%, its highest level in more than a week. There’s been a steady refrain from Fed officials this week about the need for tighter financial conditions to vanquish inflation.

Their median expectation is for 125 basis points of additional tightening by year-end, with two meetings remaining. The outcome of the November meeting may depend on September inflation data to be released next week.

The consumer price index “will likely be a key focal point for the Fed’s decision process in the near-term,” Jason Pride, chief investment officer of private wealth at Glenmede, said in a note after the jobs data. The central bank “still has a long way to go toward achieving its price stability mandate, and will likely remain hyper-focused on that goal until there are meaningful signs of progress that inflation is on a sustainable path back to its ~2% target.”

Fed Governor Christopher Waller Thursday said defeating inflation needs to remain paramount despite roiled financial markets. The government bond market has become less liquid and more volatile in recent weeks, marked by frequent large daily yield changes.

(Adds comments and chart.)

©2022 Bloomberg L.P.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.