A 0.9% increase in US employment costs for the second straight quarter lifts the USD, with Treasury yields surging across maturities.
US employment costs rose 0.9% in the second quarter, matching the prior quarter’s gain, as wages and benefits kept pace with inflation. The data underscores persistent labor cost pressures, though uneven wage growth may leave some workers behind. The rise in compensation supports consumer spending but risks embedding higher inflation expectations.
Treasury yields climbed to new highs, with the 2-year note up 7.4 basis points to 4.303% and the 10-year note rising 6.9 basis points to 4.730%. The 5-year and 30-year yields also advanced, up 7.8 and 5.5 basis points, respectively. The move reflects heightened expectations for sustained monetary policy tightness.
The USD strengthened against major peers, pushing EUR/USD to test support at 1.1471-1.1482 and GBP/USD to its 100/200-day moving averages. USD/CHF neared resistance at 0.8108-0.8119, with a break targeting the 100/200-hour MAs near 0.8150.