Treasuries are set for a second daily drop heading into a double whammy of labor data, following an unexpected jump in US job opening numbers.
US 10-year yields rose four basis points to 4.28%, climbing after reaching a two-month low Tuesday. Two-year rates, which are more sensitive to changes in monetary policy, advanced two basis points to 3.79%.
With the job openings data pointing to a hotter economy, market expectations are building that today’s ADP Research employment numbers and Thursday’s non-farm payrolls could also reflect that. It’s leading traders to pare bets on Federal Reserve interest-rate cuts, with swaps evenly split on two or three quarter-point reductions by year-end, with only a 15% chance the first cut is delivered later this month.
“The data put the latest dovishness to the test,” said Evelyne Gomez-Liechti, a strategist at Mizuho International Plc. She says a rate cut this month is unlikely and a reduction of more than a quarter-point in September looks like a stretch.
Private-sector payroll numbers published by ADP Research are forecast to rise to 98,000 in June, from 37,000 previously, according to a Bloomberg poll of economists.
