Bonds
Bond Market’s Pain Trade Turns Into Payoff After Jobs Shock
Commuters board a Red line Metro train at the Metro Center metro stop in Washington, DC.
Photographer: Al Drago/BloombergJust when bond investors were doubting one of their favorite strategies, it’s making a comeback.
Treasuries surged on Friday as a surprisingly weak US payroll report unleashed a frenzy of buying following a month of bond losses. The data, including downward revisions that trimmed a whopping 258,000 jobs from the tallies in May and June, sent traders piling into fresh wagers on Federal Reserve interest-rate cuts. Overnight-indexed swaps signaled more than 80% odds of a reduction next month while fully pricing in one more cut by year-end.