Bond-Market Day of Reckoning Denied as Weak Jobs Dim Taper Talk
- Traders were bracing for robust figure and hawkish dot plot
- Short volatility wagers have emerged in Treasury options
It looks like it’s going to take a bit longer for the $22 trillion Treasury market to liven up again.
Ten-year yields barely budged this week after mixed jobs data –- disappointing payroll growth coupled with faster-than-projected wage increases –- lowered expectations that the Federal Reserve will rush to pare its asset purchases. The employment figures marked the end of a potentially momentous stretch that also featured a long-awaited speech by Fed Chair Jerome Powell, which also did little to sway yields.
While bond-market veterans including Bill Gross have sounded the alarm about the risk of surging yields, the spread of the coronavirus’s delta variant is holding the Fed back on its plan to taper debt buying. The result is that the market has defied doomsday predictions and stuck to a narrow range.