Bond yields steady/spike on NFP 178k/hot jobs/Iran oil Hormuz/gas prices (10Y 4.34-4.42% +4bps, 2Y 3.8-3.86%); market tightening aids hawkish Fed—no cuts priced, DXY holds/gains
Key Questions
How did bond yields react to the recent NFP data?
The 10-year Treasury yield rose from 4.34% to 4.42%, up 4 basis points, while the 2-year yield increased from 3.8% to 3.86%. This spike reflects stronger-than-expected NFP of 178k jobs.
What factors are driving the rise in bond yields?
Yields are spiking due to the hot jobs data from NFP, Iran oil risks in the Hormuz Strait, and rising gas prices. These reinforce a hawkish Fed outlook with no rate cuts priced in.
How has the market's view on Fed rate cuts changed?
Markets now see no rate cuts priced in, aided by tightening financial conditions and a hawkish Fed stance. Strong data and oil shocks have reduced cut expectations.
What is the performance of the US dollar (DXY) amid these developments?
The DXY is holding firm and gaining strength. This is supported by the Hormuz shock rewriting rate-cut bets and robust US data.
How does the bond market support the Fed's current policy?
Rising yields from jobs beat and oil shocks aid the hawkish Fed by tightening financial conditions naturally. This aligns with expectations of steady or higher rates pre-upcoming data.
Yields rise on jobs beat/oil shocks/gas prices reinforcing hawkish stance; no cuts priced in amid DXY strength post-rally now softening to 99 on ceasefire; supports Fed hold/hike risks pre-data releases/minutes.