US Treasuries fall after strong US jobs data as investors bet on Fed tightening
US jobs data: US government bonds fell and stocks went down after employment data showed that jobs were in high demand. This made traders more likely to think that the Federal Reserve will raise interest rates.
Treasury yields went up sharply after the closely watched US jobs data showed that employers added 528,000 jobs in July. This was more than twice as many jobs as economists had predicted (250,000) and a big jump from June when they added only 398,000 jobs.
The two-year Treasury yield, which is affected by what people think will happen with monetary policy, went up by 0.21 percentage points to 3.25 percent, which is a big change for a market that usually moves in small steps. Less pressure was put on bonds with longer terms.
At the end of the day, the S&P 500 stock market index was down 0.2% as traders thought about the possibility of more rate hikes from the Fed. The tech-heavy Nasdaq Composite fell 0.5% because its parts are very sensitive to changes in interest rates. Both indices went down by more than 1% earlier in the day, but they went back up.
The S&P 500 went up 0.4% for the week, while the Nasdaq went up 2.2%. Since the beginning of April, this is the first time that both indices have gone up for three weeks in a row.
Some people were worried that the world’s biggest economy, the United States, might be headed for a recession, but the strong jobs data and the fact that the unemployment rate went back to a 50-year low helped ease those worries. It could also give the Fed a reason to keep raising rates quickly. In June and July, the Fed raised interest rates by 0.75 percentage points.