The yield on US Treasury bonds rose moderately, while investors are preparing for the publication of data on the US labor market for July, which may affect the pace of tightening of the Fed's monetary policy.
The yield on 5-year Treasury bonds rose by 2.6 basis points, reaching 2.801%, while the yield on 30-year bonds was 2.97% (+0.9 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, increased by 2.2 basis points to 3.059%, while the yield on 10-year bonds increased to 2.694% (+1.8 basis points).
The curve between the 10-year Treasury yield and the 2-year yield remains inverted, sending a warning that the economy may be falling or has already fallen into recession. Now the gap between 10 and 2 year U.S. debt is 37 basis points.
As for the data on the US labor market, analysts predict that the unemployment rate remained at 3.6%, and the nonfarm payrolls increased by 250 thousand. In June, the nonfarm payrolls showed another significant increase - by 372 thousand, and employment growth was again large-scale by industry. However, there are some tentative signs below the surface that the labor market is cooling. Wage growth is slowing, the number of initial applications for unemployment benefits increased during July, and the number of vacancies seems to have peaked. As the employment rate has finally caught up with demand, the pace of hiring is expected to decline steadily in the second half of the year. As for 2023, it is expected that a direct reduction in employment will begin at the end of the 1st/ beginning of the 2nd quarter, as the economy slides into a moderate recession.