Bond Traders Jolted as Data Crushes Latest Fed Rate-Cut Hopes
- Traders are no longer pricing in a rate cut before December
- US job growth surged in May, while the unemployment rate rose
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Traders’ hopes for a bond rally were dashed by surprise strength in the US labor market that raised odds the Federal Reserve will keep interest rates higher for longer.
Treasury yields surged across the curve on Friday, while traders — as well as economists at JPMorgan Chase & Co. and Citigroup Inc. — pushed out their expectations for the Fed’s first rate reduction. This comes after the Bank of Canada and European Central Bank this week became the first Group-of-Seven economies to begin to normalize interest rates, stoking optimism the tide is turning globally.