US Treasury Yields Drop Again. United States government bond or Treasury yields weakened again ahead of the release of nonfarm payroll data at the weekend. This weakening also put pressure on the US dollar.
The 10-year US Treasury yield, which is the global benchmark, fell 1 basis point to 4.72 percent on Thursday (5/10/2023). Government bond yields in other countries were also corrected. The yield on German government bonds with a tenor of 10 years fell to 2.88 percent, while the yield on Japanese bonds with the same tenor fell to 0.805 percent on Thursday.
The weakening of US bond yields is in line with investors’ wait for nonfarm payroll (NFP) data released on Friday (6/10). Investors consider the still-tight US labor market to signal the Federal Reserve will keep interest rates higher for longer.
Economists in a Reuters poll expected NFP to rise by 170,000 jobs, down from a gain of 187,000 in the previous month. The unemployment rate is expected to fall to 3.7 percent from 3.8 percent. Separate employment data this week provides a different narrative.
The so-called JOLTS job openings data beat estimates for August, while the private employment measure from ADP was weaker than expected. Jobless claims also remain at historically low levels.
Market participants have registered a record number of transactions with expectations for the outcome of the Fed’s November meeting as investors and policymakers debate the possibility of further interest rate hikes this year.
San Francisco Fed President Mary Daly, who does not vote on the Fed’s interest rate-setting committee this year, said the central bank could keep interest rates on hold if inflation and the job market cool.
Meanwhile, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said there was a higher chance for the global economy to avoid a recession. However, the IMF warned that growth remains uneven and weaker than before the pandemic.