Can Treasuries rally for a second day?
TLT•Treasury yields rose again in Asia, with the 10-year yield up 2 basis points to 5.2470%, as markets awaited September’s US payrolls report. Forecasts call for 90,000 job gains, with estimates ranging from 35,000 to 180,000.
1. Treasuries face payroll test
Treasury yields reached 5.34%, a 24-year high, after their steepest quarterly rise in 32 years. The bond selloff brought some buyers back, with yields between 5.25% and 5.35% viewed as attractive for long-term value, but a two-day rally would be the first in a month.
2. Rates and market outlook
The unemployment rate is holding at 4.1%, while average hourly earnings could offer a signal on labor-market cost pressures. Markets still expect a second Federal Reserve rate increase by year-end, though the probability of an increase in October has fallen to 25%; two Fed officials said they wanted more data before deciding.
3. Global market moves
The French-German yield spread widened past 140 basis points, its highest since 2012, after France’s budget failed to ease investor concerns about its fiscal path. Asian shares were mostly lower, European stock futures fell 0.1%, and Nasdaq futures rose 0.4%. Brent held around $102 as China suspended oil product exports.
