Treasury yields drop after surprise jobs loss in July
U.S. Treasury yields fell significantly after a surprise loss of 23,000 jobs in July, far missing the expected gain of 83,000. This unexpected labor market weakness has led traders to reduce expectations for Federal Reserve interest rate hikes.
Why it matters
The data suggests a potential cooling of the U.S. economy, which directly influences mortgage rates, consumer debt costs, and Federal Reserve monetary policy.
Treasury yields fell Friday after data showed the U.S. economy unexpectedly lost 23,000 jobs in July, raising fresh concerns about the labor market while dimming the immediate outlook for higher Fed interest rates.
The yield on the 10-year U.S. Treasury note — the main benchmark for mortgages, auto loans and credit card debt — was off by more than 3 basis points at 4.639%.
The yield on the 2-year Treasury note, which more closely follows short-term Federal Reserve rate expectations, slipped more than 5 basis points to 4.193% and hit the lowest level since July 17. The 30-year Treasury yield slipped 2 basis points to 5.192%.
One basis point equals 0.01 percentage point, and yields and prices move inversely.
Nonfarm payrolls fell by a seasonally adjusted 23,000 for the month. The Dow Jones consensus forecast had been looking for a gain of 83,000.
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