Treasuries Extend Upward Move As Jobs Data Adds To Interest Rate Optimism

(RTTNews) - Extending the upward move seen over the two previous sessions, treasuries moved notably higher during trading on Friday.

Bond prices advanced early in the session and saw some further upside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.3 basis points to 4.272 percent.

The ten-year yield closed lower for the third straight session, pulling back well off Monday's one-month closing high.

The continued strength among treasuries came as the Labor Department's closely watched monthly employment report for June generated optimism about the outlook for interest rates.

While employment jumped by more than expected in June, the report also showed downward revisions to job growth in April and May as well as another unexpected uptick by the unemployment rate.

The Labor Department said non-farm payroll employment shot up by 206,000 jobs in June compared to economist estimates for an increase of about 190,000 jobs.

However, the report also showed the increases in employment in April and May were downwardly revised to 108,000 jobs and 218,000 jobs, respectively, reflecting a net downward revision of 111,000 jobs.

The unemployment rate also rose for the third straight month, inching up to 4.1 percent in June from 4.0 percent in May. Economists had expected the unemployment rate to remain unchanged.

With the unexpected uptick, the unemployment rate reached its highest level since hitting a matching rate in November 2021.

"On net, the job market looks considerably cooler in the June report than in May, and the unemployment rate at 4.1% is above where the median Fed policymaker projected it at year-end when they compiled economic projections last month," said Bill Adams, Chief Economist for Comerica Bank.

"From the Fed's perspective, the labor market isn't soft enough justify an interest rate cut at this month's meeting," he added. "But the labor market's cooling trend is quite clear. If inflation holds in its recent range, the Fed is likely to make an initial rate cut at the following decision, in September."

Inflation data returns to the spotlight next week, with the Labor Department due to release its reports on consumer and producer prices in June. Traders are also likely to keep an eye on congressional testimony by Fed Chair Jerome Powell.