Receive free US Treasury updates
I will send myFT Daily Digest E-mail summarizing the latest information US government bonds News every morning.
Investors around the world on Thursday as U.S. borrowing costs hit a 16-year high after strong jobs data fueled expectations of further rate hikes by the U.S. Federal Reserve. I sold stocks and bonds.
Europe’s Stoxx 600 Index fell 2.3%, trading its biggest one-day drop since March, as two-year U.S. Treasury yields hit their highest level since 2007, tracking interest rate expectations. finished.
The move comes after the U.S. added 497,000 jobs in the private sector last month, nearly double economists’ expectations and the largest in more than a year, according to ADP Institute data. increased.
“The global economy will eventually fail,” said Mike Liddell, a portfolio manager at Allianz fixed income funds.
The benchmark 10-year Treasury rose to 4.08% while the US two-year Treasury rose to 5.12%, pushing yields higher as investors sold.
On Wall Street, the S&P 500 and the tech-heavy Nasdaq Composite both fell more than 1% after the release of the data, but each recovered to close 0.8% lower.
The Vicks volatility index, popularly known as the ‘Wall Street Fear Thermometer’, hit a high of 17.1 as investors fear prolonged borrowing costs will soon weigh on the U.S. economy. rose to
London’s FTSE 100 Index fell 2.2%, while Hong Kong’s Hang Seng Index fell 3% earlier.
Euro zone benchmark German 2-year bond yields also rose 0.07 percentage points to 3.36% and UK 2-year Gilts rose 0.19 percentage points to 5.56% in 2008. It was the highest level since then.
The changes underscore a growing consensus that the Fed will resume rate hikes soon after pausing its tightening policy in June for the first time in more than a year.
Dallas Fed President Laurie Logan called for an immediate resumption of rate hikes on Thursday.
“If efforts to restore price stability lose momentum, then further steps will need to be taken later to catch up,” he warned. “It’s already taken quite some time to see the full impact of monetary tightening.”
The central bank has raised the federal funds rate by more than 5 percentage points since early 2022. But according to June Federal Open Market Committee meeting minutes released this week, “nearly all” officials who attended said the Fed’s policy would be “another rate hike.” A base rate would be “appropriate.”
The US labor market remains extremely strong despite the Fed’s continued interest rate hikes.
Thursday’s private sector employment data showed strong gains in hospitality and leisure, along with construction and transportation.
“It was a very strong jobs report,” said Ben Jeffery, U.S. rates strategist at BMO Capital Markets.
He added that some wages data “was encouraging for the Fed, but nothing that would deter it from raising rates at the end of the month.”
In contrast to ADP figures, the government’s own data on Friday is expected to show job growth slowing in June.
Economists surveyed by Bloomberg expect the Labor Department to announce 200,000 U.S. job additions last month, down from 339,000 in May. But the median forecast has underestimated the jobs report for the 14th straight month.
Additional New York Reports by Taylor Nicole Rodgers and Colby Smith
