Jun 7, 2024 - Economy

Jobs data puts sting in bond market

Illustration of an upward trending line on a chart as a percent sign

Illustration: Sarah Grillo/Axios

Stocks were quiet following this morning's strong jobs report, but the bond market was a different story.

Why it matters: On again, off again, and on again hopes of multiple rate cuts this year all but vanished today.

State of play: Yields on the 10-year Treasury note — a proxy for other important loan rates, like mortgages — jumped 15 basis points to 4.43%.

  • Yields on the 2-year note, which tend to reflect expectations for the federal-funds rate two years out, rose 17 basis points to 4.9%.

What they're saying: "The bond market is back to pricing in only one rate cut (in September), down from two prior to the report," John Hancock Investment Management co-chief investment strategists Emily Roland and Matt Miskin wrote in a note today.

  • ClearBridge Investments' head of economic and market strategy Jeff Schulze said today's release should "reverse much of soft-landing optimism priced in recent weeks on the yields front with the reestablishment of the higher for longer mantra."

CME's FedWatch tool now shows a 45% expectation of a rate cut in September and only a 35% expectation for a half-point cut by December.

The big picture: A strong jobs report, of course, is not bad news.

  • While the stock market enjoys a good rate cut as much as anyone, it also tends to enjoy a strong economy, and consumers with money to spend.
  • On that note, the S&P closed down just 0.1%, the Dow lost just 0.2%, and the Nasdaq closed down 2.3%.

What's next: Next week's CPI report will tell us the latest on inflation.

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This story was an excerpt from Axios Closer, a recap on the day's biggest business stories.

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