(Bloomberg) — A key segment of the US Treasury yield curve briefly turned positive as weaker-than-anticipated labor-market data bolstered bets on steep interest-rate cuts by the Federal Reserve.
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Treasuries jumped on Wednesday — led by shorter-maturity notes that are more sensitive to the Fed’s monetary policy — after US job openings fell in July to the lowest since the start of 2021. That pushed the US two-year note’s yield momentarily below the 10-year note’s for only the second time since 2022 as traders built up wagers on a super-sized rate reduction this month.
“The Fed probably needs to move sooner and maybe even by 50” basis points, said John Fath, managing partner at BTG Pactual Asset Management US LLC. “If they do, then the curve should disinvert completely.”
Interest-rate swaps showed traders have fully priced in a quarter-point rate cut at the Fed policy meeting this month — and a…
