(Bloomberg) — Treasuries gained after a report showed the U.S. added fewer jobs than forecast and wages stagnated in June, fueling doubts about when the Federal Reserve will be able to raise interest rates.
Yields fell after the Labor Department reported that the U.S. economy added 223,000 jobs last month, compared with a forecast for 233,000 among economists surveyed by Bloomberg. Wages grew at a slower rate than anticipated. Traders have been eyeing income growth as a key indicator of when the Fed will deem the economy strong enough to raise rates for the first time since 2006.
“The Fed has the ammunition if they want to pull the trigger and tighten in September, and I think they want to, but the number this morning causes a little concern,” said Richard Schlanger, who helps invest $30 billion in fixed-income securities as vice president at Pioneer Investments in Boston. “There don’t seem to be any wage pressures at this point. Obviously it impacts inflation.”
Schlanger said he likes short-term corporate debt, though he had recently added Treasuries approaching the end of the second quarter to boost liquidity.
The yield of the benchmark 10-year U.S. Treasury note fell 4 basis points, or 0.04 percentage point, to 2.38 percent at 9:05 a.m. New York time, according to Bloomberg bond trader data. It touched 2.46 percent before the jobs report.
The 2.125 percent note due in May 2025 gained 3/8, or $3.75 per $1,000 face amount, to 97 25/32.