Treasury yields climbed on Thursday as the official employment report offered further signs that the U.S. recovery in the labor market was continuing apace amid the COVID-19 pandemic.
The bond-market will be closed early on Thursday at 2 p.m. ET and shuttered on Friday in honor of Independence Day, based on recommendations from Securities Industry and Financial Markets Association.
What are Treasurys doing?
The 10-year note yield TMUBMUSD10Y, 0.704% rose 1.9 basis points to 0.701%, a day after it booked its biggest daily rise in two weeks, while the two-year yield TMUBMUSD02Y, 0.156% was unchanged at 0.164%. The 30-year bond yield TMUBMUSD30Y, 1.459% rose 2.5 basis points to 1.458%.
What’s driving Treasurys?
The bond-market came under pressure after the U.S. Labor Department reported the U.S. economy had added 4.8 million jobs last month, above the forecast of 3.9 million from MarketWatch-polled economists. The unemployment rate fell to 11.1%.
Yet even after the jobs report, long-term yields still remain well within their usual trading range since early June.
Thursday’s report comes after Automatic Data Processing Inc.’s private-sector employment report for June showed the U.S. added 2.37 million jobs in June. ADP also raised May’s numbers to reflect that 3.06 million jobs were added that month, and not a loss of 2.76 million jobs as previously reported.
Analysts cautioned, however, the labor market may struggle to recover swiftly if the spreading COVID-19 pandemic slows down consumer spending as Americans stay indoors not due to lockdown measures but out of fear of catching the disease.
The global tally for confirmed cases of the coronavirus that causes COVID-19 rose above 10.7 million on Thursday, according to data aggregated by Johns Hopkins University, and the U.S. recorded more than 50,000 new cases in a single day for the first time since the start of the outbreak.
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Other data also accompanied the job’s report release. The trade deficit widened in May to $54.6 billion and weekly jobless benefit claims rose by 1.43 million in the seven-day period ended June 27. Factory orders for May are due at 10 a.m.
What did market participants’ say?
“There’s continued risk that a second-wave could reverse some of these job gains in July, but that should not take away from the strength of the June data,” said Thomas Simons, senior money market economist at Jefferies.
Kathy Jones, chief fixed-income strategist at Schwab Center for Financial Research, had this to say:
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