2023-09-02 02:21:48
The U.S. non-farm payrolls report for August supports the view that the labor market is slowing down. Analysts commented on Friday (1st) that the non-farm payrolls data was near perfect and the U.S. Treasury yield curve is steepening, suggesting that bond market traders expect the Fed to Will not raise interest rates this year.
The latest U.S. non-farm payrolls report showed a higher-than-expected increase of 187,000 jobs in August, but the unemployment rate rebounded and wage growth cooled. The U.S. unemployment rate rose to 3.8% in August, the highest in more than a year, higher than the 3.5% expected by economists, and the average hourly wage growth rate was 4.3%, lower than the 4.4% increase in July.
Traders see a 93 percent chance of no action by the Fed in September, a 63.9 percent chance of no action in November and a 61.3 percent chance of a pause in December, according to the latest data from the CME’s FedWatch Tool. .
After the release of the data, in early trading, the market’s initial reaction was a rise in short-term U.S. bond prices, which led to lower policy-sensitive 2-year U.S. bond yields because the market believed that the Federal Reserve may not raise interest rates again.
As the day progressed, however, Cleveland Federal Reserve Bank President Loretta J. Mester noted on Friday that the job market remains strong and inflation remains too high, adding to uncertainty for the market.
Still, the U.S. Treasury yield curve continued to steepen on Friday, as investors remained hopeful that a U.S. recession was becoming less likely.The policy-sensitive 2-year U.S. Treasury yield was only marginally higher at 4.866% at the close on Friday, while 10-Year U.S. Treasury YieldIt jumped 8.3 basis points to 4.173%.
David Donabedian, chief investment officer at CIBC U.S. Private Wealth, pointed out that from the Fed’s perspective, the combination of slowing job growth, rising labor force participation and weak income growth makes this report almost perfect.
Analyst: From the Fed’s perspective, the report is near perfect (Image: shutterstock)
Gary Pzegeo, director of fixed income at CIBC, pointed out that the normalization of labor market conditions has made the Fed’s job easier and reduced the possibility of tightening policy again this year, and the U.S. Treasury yield curve is steepening because of these data, indicating that the bond market The Fed is expected to be over.
“Friday’s non-farm payrolls are definitely positive,” said Quincy Krosby, chief global strategist at LPL Financial.
David Russell, head of global market strategy at TradeStation, said: “Friday’s data shows that people are back in the labor force and looking for work. The distortion effect of the new crown epidemic continues to fade, which can be seen in the sharp rise in unemployment and participation rates. One. Other items such as hourly wages are showing weakness and suggest the Fed should pause rate hikes.”
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