US 2-Year Treasury Yield Rises to Highest Level Since January 2025
The yield on two-year US Treasury notes rose by more than 4 basis points to 4.379%, its highest level since January 2025. The market reacted to stronger-than-expected US employment data for August and assessed their potential impact on the Federal Reserve's September decision, CNBC reports.
The yield on 10-year US government bonds, which serves as a benchmark for mortgage rates, auto loans and credit card debt, increased by more than 1 basis point to 4.78%. The yield on 30-year securities was almost unchanged at 5.243%.
US labor market data
In August, the US economy added 162,000 jobs. This significantly exceeded the consensus forecast of 53,000 jobs, compiled based on a survey of Dow Jones economists.
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A resilient labor market and inflation that remains above the Fed's 2% target on an annual basis may give the US central bank additional grounds to raise interest rates at its September meeting.
Expectations for the Fed rate
According to CME Group's FedWatch tool, traders increased bets on a 0.25-percentage-point Fed rate hike at the September 15–16 meeting. The probability of such a decision rose to 58%, about 9 percentage points higher than on the previous day.
FWDBONDS chief economist Chris Rupkey said that Fed officials had described the labor market as stable, but the new report showed unexpectedly active hiring despite high energy prices and the affordability crisis. Next week, investors expect new inflation data ahead of the Fed's September 15–16 decision.
