FX.co ★ US 10Y Yield Holds Gains Ahead of NFP

The yield on the 10-year US Treasury note hovered around 4.48% on Thursday, holding on to recent gains as investors cautiously awaited the June jobs report for fresh evidence on labor market conditions and clearer guidance on the Federal Reserve’s policy path.

Data released on Wednesday showed that US private-sector hiring slowed more than expected in the latest month, while the ISM PMI indicated wholesale energy prices have fallen back to levels last seen before the Middle East conflict. Fed Chair Kevin Warsh also noted that inflation expectations had eased over the past month, suggesting there is no immediate need to raise interest rates. Still, he reaffirmed the central bank’s commitment to restoring price stability.

Futures markets continue to price in more than a 60% probability of a Fed rate hike in September. At the same time, increased oil shipments through the Strait of Hormuz and indications of progress in indirect US–Iran negotiations have weighed on oil prices, helping to temper inflation concerns.