Treasury Yields Stay Near Record Lows After Jobs Report
By Sam Goldfarb
U.S. government bond prices held steady Friday after new data
showed the economy added more jobs than expected last month.
In recent trading, the yield on the benchmark 10-year U.S.
Treasury note was 0.536%, according to Tradeweb, compared with
Yields, which rise when bond prices fall, immediately ticked
higher after the Labor Department said the economy added 1.8
million jobs in July on top of the 4.8 million added the previous
month. That was above the forecast of economists surveyed by The
Wall Street Journal, who had expected a 1.5 million increase in
Yields, though, quickly fell back to previous levels, with
investors continuing to expect a challenging economic recovery and
years of ultraloose monetary policy while businesses and households
try to recover from the fallout of the coronavirus pandemic.
Before the report, yields on longer-term Treasurys had been
trending downward due in part to signals from the Federal Reserve
that it could leave short-term interest rates at around zero until
inflation has reached or exceeded its 2% target.
Investors' expectations for years of easy money policies have
helped drag the 10-year yield near its record closing low of 0.501%
after it spent months mostly hovering around two-thirds of a
percent. At the same time, signals from the Fed have led to an even
sharper decline in the yields on Treasury-inflation protected
securities, or TIPS, as investors bet the central bank will at
least drive inflation closer to its target.
The yield on the 10-year TIPS dropped to a record low in late
July and has continued to decline since, having settled Thursday at
around minus 1.08%.
A measure of investors' annual inflation expectations based on
the difference between 10-year nominal and inflation-protected
Treasury yields -- known as the break-even inflation rate -- has
climbed to above 1.6% from 1.05% on May 1.
Write to Sam Goldfarb at firstname.lastname@example.org
(END) Dow Jones Newswires
August 07, 2020 10:13 ET (14:13 GMT)
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