U.S. Treasury yields held their ground on Friday as investors looked ahead to the official scorecard of the labor market’s health, amid growing questions about the longevity of the recordlong economic expansion.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -0.28% was down 0.7 basis point to 1.529%, while the 30-year bond yield TMUBMUSD30Y, -0.26% fell 1.2 basis points to 2.026%. The 2-year note yield TMUBMUSD02Y, +1.12% rose 1.6 basis points to 1.402%.
What’s driving Treasurys?
The Bureau of Labor Statistics will release the nonfarm payrolls report for September at 8:30 a.m. Eastern, giving an update of U.S. jobs growth when recent data such as manufacturing and services sector surveys point to a slowing economy. Other data for release also includes trade deficit numbers for August.
Analysts polled by MarketWatch anticipate a reading of 147,000, from 130,000 in the previous month, according to a survey of economists’s polled by MarketWatch. The unemployment rate is expected to hold steady at 3.7%, and average hourly earnings growth to tick up by 0.2%.
A worse-than-expected jobs report could heap pressure on the Federal Reserve to contemplate its third straight rate cut, even as the members of its rate-setting committee have been reluctant to tip their hand on the prospect of an October rate-cut.
Fed Vice Chairman Richard Clarida said on late Thursday that the probability of a recession remains low as long as the central bank can adopt “appropriate monetary policy.” He didn’t say if the central bank would cut rates at the end of this month, and that the economy was in a “good place” despite the recent round of disappointing data.
Investors will look forward to a busy docket of speeches from senior Fed officials, including Atlanta Fed President Raphael Bostic at 10:25 a.m., Fed Chairman Jerome Powell at 2 p.m. and Fed Gov. Lael Brainard at 2:10 p.m.
What did market participants’ say?
“Today is NFP day, and given the week we have had so far, today’s print will be closely watched to gauge both the next likely move by the FOMC, and the strength of the US economy. The unexpected weakness in ISM manufacturing and non-manufacturing indexes have pushed Fed pricing into deeper cutting territory,” wrote analysts at NatWest markets.