Fed Rate Hike Bets Ease After Weak NFP; Trump Calls Warsh Dovish; FOMC Minutes and $119B Auction Ahead
Key Questions
What was the June NFP result and how did it affect rate hike odds?
June NFP came in at 57K versus 110K expected, sharply reducing the September rate hike probability to 54%. This weak print lowered expectations for near-term Fed tightening.
What did Trump say about Kevin Warsh and why does it matter?
Trump described Warsh as 'dovish,' contradicting earlier hawkish perceptions. This comment could influence market views ahead of Warsh's first FOMC meeting.
What is the next key catalyst after the weak jobs data?
FOMC minutes are the immediate focus, especially with Warsh's debut. CPI data later this month will also be closely watched for inflation trends.
Why are long-end yields expected to face upward pressure?
A $119B long-term Treasury auction after the July 4th holiday and Warsh's de-emphasis of forward guidance could lift yields. Yields are currently stuck around 4.475% on the 10-year.
How are bond ETF flows reacting to the current environment?
Bond ETF flows have surged 60% year-over-year, signaling strong institutional demand for fixed income despite hawkish signals. This challenges the view that yields will rise sharply.
What do rising short-term yields indicate about market expectations?
The 6-month yield has reached 4%, confirming that markets are still pricing in some rate hikes. This reflects ongoing caution despite the weak NFP print.
How did Treasury yields and gold react to the NFP miss?
Yields fell initially but remain near 4.475%, while gold showed mixed recovery attempts around $4,100-$4,153. Both assets are awaiting clearer signals from FOMC minutes.
What auction and policy shift could influence long-end yields?
The $119B long-term Treasury auction combined with reduced forward guidance emphasis may push long-end yields higher. This follows the holiday period and adds supply pressure.
June NFP came in at 57K vs 110K expected, sharply reducing September rate hike probability to 54%. Trump called Kevin Warsh 'dovish', contradicting earlier hawkish perception. Yields fell but are stuck at 4.475%. FOMC minutes today are the next catalyst, especially with Warsh's first meeting. A $119B long-term Treasury auction after July 4th holiday, combined with Warsh's de-emphasis of forward guidance, could push long-end yields higher. Bond ETF flows surging 60% YoY challenge hawkish view. Next catalyst: CPI later this month. Short-term yields rising (6-month at 4%) confirm market pricing in hikes.