Strong US employment data released on Friday pushed Treasury yields higher, but risk assets such as equities held their ground, according to finance.yahoo.co.jp. Investors did not broadly sell off riskier holdings despite the jump in borrowing costs.
The US economy added 162,000 jobs in August, beating expectations, as reported by Yahoo! News. The stronger-than-expected figure reinforced market bets that the Federal Reserve will raise interest rates again in September, according to the Nikkei.
The yield on the two-year Treasury note climbed to its highest level since January of last year following the robust jobs report, Bloomberg reported. Rising yields typically pressure stock valuations, yet the selling did not spread across risk assets, finance.yahoo.co.jp noted.
The resilient tone in markets comes as investors weigh conflicting signals. On one hand, solid job growth supports the case for further Fed tightening. On the other, former President Donald Trump has publicly stated he will not tolerate high interest rates, putting the Fed chair in a difficult position between political pressure and economic data, according to the Nikkei.
Treasury bonds fell broadly after the report, with the move concentrated in shorter-dated maturities. The market’s reaction suggests traders see the data as reinforcing the likelihood of another rate hike at the Fed’s September meeting.
Despite the higher yield environment, the absence of widespread selling in risk assets indicates investors are not yet convinced that tighter policy will derail the economic expansion. The focus now shifts to whether this resilience can hold as the Fed meeting approaches and as political pressure on the central bank intensifies.
