U.S. Treasury prices fell after stronger-than-expected employment and wage growth data were released, prompting traders to begin adjusting their bets on interest rate cuts for this year. Yields on Treasury bonds of all maturities rose, particularly short-term yields. Interest rate swap data shows that traders expect a roughly 70% probability of a 25 basis point rate cut in September, down from an estimated 90% on Thursday. Traders widely expect the Federal Reserve to hold rates steady at its June 17-18 meeting, with a only 10% chance of a rate cut in July. Kevin Flanagan, head of fixed income strategy at WisdomTree, stated, "The employment data rules out the possibility of rate cuts in June and July. We remain cautious, given that employment has not shown signs of slowing down, and the market is turning its attention to whether next week's CPI can continue the trend of declining inflation."
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Strong employment data: US Treasury yields rise as traders lower expectations for The Federal Reserve (FED) rate cuts this year.
U.S. Treasury prices fell after stronger-than-expected employment and wage growth data were released, prompting traders to begin adjusting their bets on interest rate cuts for this year. Yields on Treasury bonds of all maturities rose, particularly short-term yields. Interest rate swap data shows that traders expect a roughly 70% probability of a 25 basis point rate cut in September, down from an estimated 90% on Thursday. Traders widely expect the Federal Reserve to hold rates steady at its June 17-18 meeting, with a only 10% chance of a rate cut in July. Kevin Flanagan, head of fixed income strategy at WisdomTree, stated, "The employment data rules out the possibility of rate cuts in June and July. We remain cautious, given that employment has not shown signs of slowing down, and the market is turning its attention to whether next week's CPI can continue the trend of declining inflation."