2-year yield rises to highest since January 2025 after hot jobs report boosts expectations that the Fed could raise rates — SkimNews
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- 2-year Treasury yield climbed more than 7 basis points to 4.425% — its highest level since January 2025 — as traders repriced Fed expectations after the blockbuster August jobs report.
- U.S. economy added 162,000 jobs in August, more than triple the 53,000 consensus estimate from Dow Jones's economist poll, with annual price growth still running above the Fed's 2% target.
- Fed rate-hike probability for the September 15-16 meeting jumped to 58%, roughly 9 percentage points higher than a day earlier, according to the CME Group's FedWatch tool.
- 10-year Treasury yield — the benchmark for mortgages, auto loans, and credit card debt — rose less than 4 basis points to 4.802%, while the 30-year held nearly flat at 5.263%.
- Vice President JD Vance on Thursday called on the Fed to cut interest rates to make homes more affordable, a stance now standing in direct contrast to the market's repriced hike expectations.
- Chris Rupkey, chief economist at FWDBONDS, said the "stellar jobs report shows hiring is surprisingly robust" despite high energy prices and an ongoing affordability crisis, warning the "only fear is the Fed itself" if it moves to hike.
- Bond investors are now focused on fresh inflation data due next week as the final key input ahead of the Federal Reserve's September 15-16 interest rate decision.
Why it matters: August's 162,000-job print blew past the 53,000 consensus, flipping trader odds to a 58% chance of a Fed rate hike at the September 15-16 meeting — up 9 percentage points in a day. The 2-year's surge to 4.425%, its highest since January, is pulling the 10-year benchmark to 4.802%, feeding directly into mortgage and auto-loan rates.
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