Treasuries surged on Friday, extending gains from the previous session, after the Labor Department reported significantly weaker-than-expected job growth in July. Non-farm payroll employment rose by only 73,000 jobs, far below the anticipated 110,000. Additionally, there were substantial downward revisions to May and June job growth, totaling 258,000 fewer jobs than previously reported. The unemployment rate also ticked up to 4.2% in July from 4.1% in June, matching expectations. This weak jobs data has intensified optimism for a September interest rate cut by the Federal Reserve.
The yield on the benchmark ten-year note plunged 14.0 basis points to 4.220%, reaching its lowest closing level in three months. Bond prices remained firmly positive throughout the day, driven by the jobs report and increased demand for safe-haven assets amidst new tariff announcements. President Donald Trump's administration announced new tariff rates ranging from 10% to 41% on goods from dozens of countries, including a 40% levy on transshipped goods.
Jamie Cox, Managing Partner for Harris Financial Group, commented on the situation, stating, "Powell is going to regret holding rates steady this week." He added, "September is a lock for a rate cut and it might even be a 50-basis point move to make up the lost time." The rally in Treasuries pushed yields lower across tenors by two basis points, capping a week of volatility driven by various economic factors. The market's focus has now shifted back to inflation concerns following these developments.
