Key facts
- US Treasury yields retreated from recent highs.
- Stronger-than-expected US jobs data was released.
- The US dollar strengthened significantly, reaching a two-month high.
- The Japanese yen fell sharply against the dollar, surpassing 160.
- August Gold futures declined sharply.
- The May non-farm payrolls report showed 172,000 jobs added.
- German 2-year government bond yield settled at 2.59% at auction.
- The 10-year and 30-year US Treasury yields hit their lowest points since mid-May.
- The benchmark 10-year U.S. Treasury yield settled at 4.428%.
US Treasury yields retreated from recent highs as strong labor market data bolstered expectations that the Federal Reserve may raise interest rates. The JOLTS report indicated continued economic resilience, prompting investors to reassess Fed policy. The US dollar strengthened significantly, reaching a two-month high, driven by stronger-than-expected US jobs data and stalled peace talks with Iran. The yen fell sharply against the dollar, surpassing the 160 mark, prompting warnings from Japanese officials. August Gold futures declined sharply, falling below recent lows due to a hawkish Federal Reserve repricing. The May non-farm payrolls report showed 172,000 jobs added, exceeding expectations and increasing Treasury yields, which raises the opportunity cost of holding gold. In contrast, Germany's 2-year government bond yield settled at 2.59% at auction, down from the previous yield of 2.7%. Falling yields can indicate increased demand for bonds, potentially signaling expectations of lower interest rates or a flight to safety. Treasury yields declined by 2bp-3bp, influenced by oil prices and following steeper drops in European bond markets. The 10-year and 30-year yields reached their lowest points since mid-May, with the 30-year falling below its 50-day average for the first time since March. The benchmark 10-year U.S. Treasury yield decreased by 4.9 basis points, settling at 4.428%. Municipal bonds remained mostly flat while US Treasuries were observed to be cheapening, according to commentary from CreditSights, with retail investors reportedly distracted by the stock market.