After the April jobs data revealed weaker-than-expected payroll growth and an unexpected tick higher in the unemployment rate, U.S. Treasury rates fell on Friday. (Photo : by Christina @ wocintechchat.com/ Unsplash)
Weaker-than-expected April jobs data led to a decline in U.S. Treasury rates on Friday.
The 10-year Treasury yield dropped to 4.5%, down by around 7 basis points, reaching 4.814%.
With just 175,000 jobs added last month, below the projected 240,000, and an unexpected uptick in the unemployment rate to 3.9%, the Federal Reserve may consider earlier interest rate cuts to address the weakening labor market.
After the April jobs data revealed weaker-than-expected payroll growth and an unexpected tick higher in the unemployment rate, U.S. Treasury rates fell on Friday.
The 10-year Treasury's yield was off to 4.5% by around 7 basis points. The yield dropped to 4.814%, a 6 basis point decrease. Prices and yields move against each other. A basis point is equal to 0.01% of anything.
The Bureau of Labor Statistics said on Friday that U.S. payrolls increased by just 175,000 last month, falling short of the 240,000 experts' projection based on the Dow Jones. Against an expectation that predicted it would remain stable at 3.8%, the jobless rate increased to 3.9%. The research also revealed that wage growth was lower than anticipated.
As anticipated, the Federal Reserve held interest rates steady earlier this week. "Reducing the target range until [the Federal Open Market Committee] has gained greater confidence that inflation is moving sustainably toward 2 percent," stated policymakers.
Fed Chair Jerome Powell did, however, concede that the central bank may have to take action in response to a contracting labor market, pointing to the bank's twin mandate of maximum employment and stable prices.
Recent weeks have seen an increase in uncertainty around the number of rate cuts that may occur this year as well as when they may start. Many investors now anticipate fewer cuts and that they won't happen until later in the year.
The poor labor data released on Friday could enable the Federal Reserve to lower interest rates sooner.
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