U.S. Treasury prices fell, and traders began to cut their bets on interest rate cuts this year after stronger-than-expected employment and wage growth data were released. Treasury yields of all maturities rose, especially short-term bond yields. Traders are pricing in about a 70% probability of a 25 basis point rate cut in September, compared with about 90% on Thursday, according to interest rate swap data. Traders widely expect the Fed to leave rates unchanged at its June 17-18 meeting, with only a 10% chance of a rate cut in July. Kevin Flanagan, head of fixed income strategy at WisdomTree, said, "The employment data precludes a rate cut in June and July. We continue to stay on the sidelines, and given the lack of a slowdown in employment, the market will instead focus on whether next week's CPI can continue the downward trend in inflation. "
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U.S. employment data exceeds expectations, traders lower interest rate cut bets to 70%
U.S. Treasury prices fell, and traders began to cut their bets on interest rate cuts this year after stronger-than-expected employment and wage growth data were released. Treasury yields of all maturities rose, especially short-term bond yields. Traders are pricing in about a 70% probability of a 25 basis point rate cut in September, compared with about 90% on Thursday, according to interest rate swap data. Traders widely expect the Fed to leave rates unchanged at its June 17-18 meeting, with only a 10% chance of a rate cut in July. Kevin Flanagan, head of fixed income strategy at WisdomTree, said, "The employment data precludes a rate cut in June and July. We continue to stay on the sidelines, and given the lack of a slowdown in employment, the market will instead focus on whether next week's CPI can continue the downward trend in inflation. "