(Bloomberg) — Treasuries fell for a second day as fresh data showing resilience in the US labor market gave traders pause about the Federal Reserve’s path on interest-rate cuts
Yields settled about three basis points higher across most tenors, led by shorter-dated debt, which is more sensitive to changes in monetary policy. And interest-rate swaps showed traders slightly pared bets on Fed rate cuts. They are now pricing in 42 basis points of reductions by the end of the year, with the first full cut coming by the October meeting.
“The bottom line is that the Fed can’t credibly cut rates with an unemployment rate of 4.1%,” said George Catrambone, head of fixed income, DWS Americas. “There is a glass ceiling on how high yields can push out of their current range with a Fed that’s frozen in place.”
Data released Thursday showed initial claims for unemployment benefits fell to 217,000 in the week ended July 19, the…
