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Bond Traders Respect Job Gains, But Inflation Is Make-or-Break

  • Yields rose Friday on data, before this week’s auctions
  • Yet CPI data seen as crucial for shaping market’s Fed view
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Medley's Richards Says Follow the Fed on Inflation

If the latest U.S. payrolls report wasn’t strong enough to rattle the bond bulls, this week’s inflation data may do the trick.

Employers added an above-forecast 209,000 workers in July and the jobless rate matched a 16-year low. Bank of America Corp. said the report had “everything you could ask for” and Jefferies LLC dubbed it “rock solid!” Yet even as 10-year Treasury yields rose Friday, they still ended the week lower, as traders looked to this week’s inflation data as a better barometer of whether the Federal Reserve can hike again in 2017.