(Bloomberg) — US Treasuries gained, pushing yields lower, after a mixed report on the US labor market left traders holding tight to bets that Federal Reserve officials will lower interest rates this year.
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The two-year Treasury note’s yield, which is more sensitive than longer maturities to changes in the Fed’s policy outlook, declined as much as 8 basis points to 4.62% — the lowest since April 1. While the US government’s June employment report showed job creation was above forecast, prior months were revised lower and the unemployment rate rose.
Derivative traders are steadfast on the odds of lower US borrowing costs in 2024. They are pricing in about a 70% chance that policymakers cut rates as soon as September. For all of 2024, the contracts imply a total of 48 basis points worth of rate reductions.
“It’s a Fed and US Treasury market friendly number,” said Gregory Faranello, head of US rates…
