2 Jul 2015
Treasury yields drop as US wage growth stalls in June
FXStreet (Mumbai) - The Treasuries gained, pushing the yields lower after the payrolls report in the US showed the pace of job addition sowed in June, while wage growth stalled, raising doubts whether the economy would be able to sustain rate hikes.
Rate hike expectations drop
Fed funds futures show there is a 27% chance the central bank will increase its benchmark rate from near zero in September, down from 35% Wednesday. Consequently, the yield turned lower.
The 2-year yield, which mimics short-term interest rate expectations, now trades 4.7 basis points lower at 0.641%. The yield of the benchmark 10-year Treasury note fell 4 basis points to 2.38%. The 30-year yield also fell to 3.179%. The interest rate sensitive 2-year yield now trades 4.7 basis points lower at 0.641%.
The pace of job additions slowed, although the number stayed below 200K. However, the growth in the average hourly earnings stalled, which raised questions whether the spike in the personal sending seen last month shall last.
Rate hike expectations drop
Fed funds futures show there is a 27% chance the central bank will increase its benchmark rate from near zero in September, down from 35% Wednesday. Consequently, the yield turned lower.
The 2-year yield, which mimics short-term interest rate expectations, now trades 4.7 basis points lower at 0.641%. The yield of the benchmark 10-year Treasury note fell 4 basis points to 2.38%. The 30-year yield also fell to 3.179%. The interest rate sensitive 2-year yield now trades 4.7 basis points lower at 0.641%.
The pace of job additions slowed, although the number stayed below 200K. However, the growth in the average hourly earnings stalled, which raised questions whether the spike in the personal sending seen last month shall last.