US yields advance after strong jobs report backs rate hike view
TLT•US Treasury yields rose after payrolls increased by 165,000 last month, well above economists’ 65,000 forecast, and unemployment fell to 4.1%. Traders priced in a 75% chance of a December rate hike, up from 72% before the report.
1. Yields rise after jobs data
US Treasury yields rose on Friday after data showed the economy added 165,000 jobs last month, following an upwardly revised gain of 60,000 in September. The 10-year yield rose 4.3 basis points to 4.878%, the 30-year yield gained 2.6 basis points to 5.277%, and the two-year yield climbed 5.1 basis points to 4.528%.
2. Rate expectations increase
The unemployment rate declined to 4.1% from 4.2% in September. Futures priced in a 75% chance of a Federal Reserve rate hike in December, up from 72% before the data; traders saw more than an 80% chance of tightening by January. The spread between two- and 10-year yields narrowed to 33.7 basis points from 37.1 basis points the previous session.
