U.S. Government-Bond Yields Rise After Jobs Data
By Julia Ambra-Verlaine
U.S. government-bond yields climbed Thursday after data showed
the economy added more jobs than expected last month, a sign of
rebounding growth in the wake of pandemic shutdowns.
The yield on the 10-year U.S. Treasury note, a key benchmark for
borrowing costs on everything from mortgages to student loans, rose
to a recent 0.704%, according to Tradeweb, from around 0.679%
earlier in the session. Bond yields rise as prices fall.
Some analysts called the relatively muted move a signal that
investors believe that a full economic recovery will take time. The
10-year yield tends to rise and fall with investors' expectations
for growth and inflation and has traded within a relatively narrow
range around 0.7% in recent weeks, a stall many attribute to
economic worries and aggressive monetary stimulus.
Thursday's climb came after data showed the jobless rate fell to
11.1% in June and the U.S. added 4.8 million jobs, boosting hopes
the economy will avoid investors' worst-case scenarios. But many
worry that a recent reacceleration in the pandemic will force new
lockdowns. That could slow the recovery, prompting the central bank
to keep interest rates low. It could also limit any pickup in
inflation, increasing the appeal of government debt by preserving
the purchasing power of its fixed coupon payments.
Even with big job gains in May and June, employment is still
well below levels from early in the year. "With the spread of the
virus accelerating again, we expect the recovery from here will be
a lot bumpier and job gains far slower on average," Michael Pearce,
senior U.S. economist at Capital Economics, says in a note.
In a sign of increased investor optimism, the U.S. dollar
advanced against the yen, increasing over 0.2% to 107.70 as equity
futures rallied. The WSJ Dollar Index, which measures the U.S.
currency against major peers, was recently little changed.
Amrith Ramkumar contributed to this article
Write to Julia Ambra-Verlaine at firstname.lastname@example.org
(END) Dow Jones Newswires
July 02, 2020 09:59 ET (13:59 GMT)
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