US Treasury yields fell on Friday after stronger-than-expected employment data showed that tariff uncertainty hasn’t yet affected the jobs market, leading traders to reduce bets on imminent interest-rate cuts. The data, which showed a rise of 177,000 non-farm payrolls above estimates, pushed yields higher by more than 10 basis points.
Traders have pulled back their expectations for Federal Reserve rate reductions, pricing in only three quarter-point rate cuts before the end of 2025, down from four earlier in the week. The Fed is now expected to cut rates only once this year, rather than multiple times as previously thought.
The data also pushed yields on two- to five-year notes higher, with investors rethinking their bets that President Trump’s tariffs will quickly slow the world’s largest economy. Two-year yields are on course for their largest two-day rise since October.
Economists at Goldman Sachs and Barclays have adjusted their forecasts to a July rate cut from June, citing strong payrolls data and a manufacturing survey that came in stronger than anticipated. The Fed is expected to keep rates on hold next week, despite pressure from Trump to cut rates.
Uncertainty over tariffs remains a key factor in the economic outlook, with China exempting some US goods from tariffs worth around $40 billion. Japan has also announced plans for trade discussions in mid-May.
The labor data offers the last major reading of the US economy’s health ahead of the Fed’s next meeting, where traders and economists expect rates to remain on hold despite pressure from Trump to cut rates.
Source: https://finance.yahoo.com/news/us-treasuries-slide-solid-jobs-204242523.html