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Treasury rally highlights employment data ahead of Fed
The article pertains to expectations for the U.S. employment report for September, where the addition of approximately 90,000 jobs is anticipated, down from 162,000 jobs in the previous month, indicating ongoing strength in the labor market. Despite this expected slowdown, markets forecast that the Federal Reserve will remain in a stance of raising interest rates, as the market would need a sharp negative surprise or near-zero growth to alter the trajectory of bond yields. Investor demand for Treasury bonds has increased as a safe haven amid concerns over rising European debt burdens, leading to a decline in yields on two-year US bonds below 4.8%, and causing the yields on 10-year bonds to fall from their highest levels in 24 years. Despite this decline, expectations still point to three interest rate hikes by July, amid persistent inflation above 3% and oil prices near $100 per barrel.
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