Treasuries Advance Following Revised Jobs Data, Fed Minutes

(RTTNews) - After showing a lack of direction early in the session, treasuries moved higher over the course of the trading day on Wednesday.

Bond prices bounced back and forth across the unchanged in early trading but climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4.0 basis points to 3.778 percent.

With the decrease, the ten-year yield closed lower for the fourth consecutive session, dropping to its lowest closing level in well over a year.

Treasuries benefited from their appeal as a safe haven after the Bureau of Labor Statistics released revised data showing job growth in the U.S. was weaker than previously reported in the twelve months ended March 2024.

The BLS said the U.S. economy added 818,000 fewer jobs from March 2023 to March 2024 than initially reported, reflecting 0.5 percent weaker job growth.

"The preliminary downward revision suggests a weaker labor landscape and helps explain the most recent findings from a New York Fed survey, that consumers are worried about job security and the ability to find new jobs," said Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, "Given the concerns over the underlying strength of the labor market, the preliminary report could lead to a more dovish Fed on September 18 should the September payroll announcement see the unemployment rate tick higher yet again."

Treasuries saw continued strength after the Federal Reserve released the minutes of its latest monetary policy meeting, which seemingly provided additional support for expectations for an interest rate cut in September..

The minutes of the Fed's late July meeting, released Wednesday afternoon, revealed that the "vast majority" of participants believed it would "likely be appropriate" to lower rates at the next meeting if inflation data continued to come in "about as expected."

Reports released by the Labor Department last week showed the annual rates of consumer and producer price growth slowed in line or slightly more than economists had forecast in July.

Fed officials unanimously agreed to leave interest rates unchanged at the meeting, although the minutes noted several participants observed that the progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range by 25 basis points at the July meeting.

On the heels of the minutes, the Fed is still widely seen as likely to lower interest rates next month, with CME Group's FedWatch Tool indicating a 59.5 percent of a quarter point rate cut next month and a 40.5 percent chance of a half point rate cut.

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims and existing home sales as well as remarks by Fed officials at the Jackson Hole Economic Symposium.