Treasury yields move lower after jobs report

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Treasury yields fell for the first time this week after the latest snapshot of the US labour market showed – as widely expected – another month of steady jobs gain and paved the way for the Federal Reserve to raise interest rates next week.Yields on the 10-year, which have risen nearly 30 basis points since the end of February to break 2.60 per cent yesterday after a series of comments from Fed officials put the prospect of a March rate hike on the table, dropped 1.4bps to 2.5909 per cent.

Yield on the more policy sensitive 2 year note dipped half a basis point to 1.368 per cent.

Stock futures added to their gains, with the three major stock indices poised to open between 0.4 per cent and 0.5 per cent higher following a week of lacklustre trading.

“A March hike is a done deal,” said Luke Bartholomew, investment manager at Aberdeen Asset Management, adding:

The report was the last piece in the puzzle and there is nothing here that will make the Fed want to step back from their recent signalling. The challenge for the Fed now is to ensure that the market doesn’t start extrapolating a much more rapid series of hikes. Investors are comfortable with three hikes this year but any suggestion of four will probably cause a wobble.

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