Seeking Alpha
2024.10.04 10:06
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Yields take off to new monthly highs after latest jobs report

U.S. Treasury yields rose to new monthly highs following a stronger-than-expected nonfarm payrolls report, which showed an increase of 254K jobs in September and a drop in the unemployment rate to 4.1%. This led to a decrease in expectations for significant rate cuts by the Federal Reserve, with the odds of a 50 basis point cut in November falling to 7.5%. The 2-Year Treasury yield reached 3.88%, while the 10-Year yield climbed to 3.97%. As yields rise, bond prices face downward pressure, impacting various Treasury and bond ETFs.

U.S. Treasury yields gained on Friday, as investors sold off bonds after the latest nonfarm payrolls report came in much stronger than expected and led to traders paring back their expectations for large rate cuts by the Federal Reserve.

U.S. nonfarm payrolls popped up by 254K in September, significantly higher than the forecasted 132.5K level, while the unemployment rate slipped to 4.1%.

According to the CME FedWatch tool, the odds of a 50 basis point rate cut by the Fed in November inched down to just 7.5% after the jobs report.

The shorter end U.S. 2 Year Treasury yield (US2Y) had last advanced 14 basis points to 3.85%, and touched 3.88% at one point, which is its highest level recorded since September 3.

The longer-end U.S. 10 Year Treasury yield (US10Y) had climbed up by 10 basis points to 3.95%, and earlier topped 3.97%, marking its highest trading point since August 9.

Furthermore, see how other yields trade across the entire yield curve here.

As Treasury yields advance, they place downward pressure on bond prices, as the two move in opposite parallels. Here are some of the big-name Treasury and fixed income focused ETFs that are in the spotlight as a result:

Treasury ETFs: (TLT), (TLH), (IEF), (IEI), (SHY), (SGOV), (SCHO), and (BIL).

Bond ETFs: (AGG), (BND), (VCIT), (MUB), (MBB), (JNK), (LQD), (HYG), and (TIP).