Analysis: Weak Jobs Data Dims Fed Rate Hike Bets, U.S. Treasury Yields Rally

Odaily News: U.S. employers unexpectedly cut jobs in July, signaling challenges in the labor market that could affect the Federal Reserve's willingness to raise interest rates, prompting a rally in U.S. Treasuries. The yield on the two-year Treasury note, which is sensitive to near-term shifts in Fed monetary policy, fell 8 basis points to 4.16% on Friday as markets trimmed expectations for rate hikes in the coming months. The 10-year Treasury yield dropped 6 basis points to 4.62%.

Data released by the U.S. Bureau of Labor Statistics on Friday showed nonfarm payrolls fell by 23,000 in July, while figures for the previous two months were also revised sharply lower. The unemployment rate declined to 4.1%, even as the labor force participation rate continued to fall. The data indicates that the labor market may be facing challenges after showing surprising strength earlier this year. "The overall number in the jobs report is negative and absolutely shocking," said Tom di Galoma of Mischler Financial Group. "I suspect the Fed won't tighten policy in September." (Jin10)