Analysis: Weak Nonfarm Payrolls Dim Fed Rate Hike Expectations, Bond Prices Rise

Odaily Odaily reported that U.S. Treasury bond prices rose, and traders scaled back their expectations for Federal Reserve interest rate hikes in the coming months, following weaker-than-expected nonfarm payroll data. The yield on the two-year Treasury note, which is most sensitive to changes in monetary policy, fell six basis points to 4.11%, while the yield on the 10-year note fell two basis points to 4.46%. Interest rate swap data indicated that the market now sees about a 20% probability of a rate hike at the Fed's meeting later this month, down from 33% before the data was released.

The market currently expects the Fed to enact fewer than two rate hikes, each of no more than 25 basis points, by March 2027. Nonfarm payrolls increased by 57,000 last month, and the figures for the previous two months were revised downward, compared to the median estimate of 113,000 from economists surveyed by Bloomberg. The unemployment rate fell to 4.2% due to a sharp decline in the labor force participation rate. (Jin Shi)