Treasury Yields Accelerate Rise as U.S. Economy Adds 2.51 million Jobs

U.S. Treasuries barely budged Thursday after the latest employment figures produced no surprises.

Payrolls rose 2.51 million in May, the Labor Department said in a monthly report. The average rate per job, a key gauge of the labor market’s health, reached an eight-year high at 2.48 percent. Wage growth also continued to accelerate, advancing by 2.9 percent in the 12 months through May.

“The strong jobs number was widely expected and is having a limited impact on Treasuries,” said David Woo, chief investment officer at investment firm Pacific Alternative Asset Management Co.

The yield on the benchmark 10-year U.S. Treasury note rose 2 basis points, or 0.02 percentage point, to 2.828 percent. The broader gauge of Treasuries outstanding advanced less than 0.02 percent, or 6.24 basis points, to 111.75.

Treasuries have been driven higher by the Federal Reserve’s moves to tighten monetary policy amid inflationary pressures. The central bank raised interest rates last month for the second time this year, and signaled three hikes for 2019.

June reports have so far gone smoothly with signs of underlying strength in the labor market. The unemployment rate fell to 3.9 percent in May, the lowest in more than half a century. The Labor Department’s monthly employment report forecasts are largely in line with Fed’s view, and they are far closer to the 2.8 percent to 3.1 percent range that the central bank is looking for.

From there, the Fed’s policy makers have signaled they plan to continue hiking rates gradually. Of five Fed officials interviewed for a May 26 Wall Street Journal editorial, four supported a third interest-rate increase at the June monetary-policy meeting, though one voted against one.

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