Rising yields and USD strength reflect solid economic data, reinforcing expectations of Fed patience on rate cuts before key employment figures.
US Treasury yields surged on Thursday, with the two-year note rising over 7 basis points and the 10-year yield climbing nearly 6 basis points to 4.67%. The move followed robust economic data, including better-than-expected initial jobless claims and strong productivity figures, signaling a resilient labor market and healthy economic output.
Economists forecast the July employment report, due tomorrow, will show nonfarm payrolls rising by 83,000 after June’s disappointing 57,000 gain. The unemployment rate is expected to hold steady at 4.2%, while average hourly earnings are projected to increase 0.3% month-over-month and 3.5% year-over-year.
A stronger-than-expected report could extend the rise in yields and the USD, while potentially pressuring equities by delaying Fed rate cut expectations. Conversely, weaker data may trigger a pullback in yields and support risk assets.