US Treasury yields hit 4% amid strong jobs data

US Treasury yields have surged to 4 per cent, the highest since August, after a robust jobs report led traders to reassess monetary policy. The 10-year yield rose four basis points on Monday to 4.01 per cent, while the two-year yield increased eight basis points to 4 per cent.

The moves reflect swirling doubts over the Fed’s next moves. Money markets no longer see another half-point cut this year, while a quarter-point reduction in November that was seen as certain is now priced at a 86% probability. For the first time since Aug. 1, there are fewer than 50 basis points of cuts implied through the end of the year.

European bonds followed suit, with the German 10-year yield rising to 2.25 per cent and the UK yield climbing to 4.19 per cent.

The recent selloff adds to a year of volatility, with stronger-than-expected US services data complicating economic outlooks. The yield curve risks inverting again as shorter-dated Treasuries underperform.

Traders are looking for guidance from upcoming speeches by Fed officials, while US inflation data is expected this week, with a modest 0.1 per cent rise projected for September.

Attribution: Bloomberg

Subediting: M. S. Salama