US Treasury yields stayed elevated after data signaled continued resilience in the labor market | 03/03/2023

US Treasury yields stayed elevated after data signaled continued resilience in the labor market, supporting the case for the Federal Reserve to keep raising interest rates. Stocks got a lift late in the session from comments by Atlanta Fed President Raphael Bostic. He said the Fed could be in a position to pause its rate hikes by mid to late summer. Boston Fed President Susan Collins added to the bid in risk, saying the extent of the rate increases will depend on incoming data and not on some predetermined path. The S&P 500 rose for the first day in three with a 0.75% gain, the NASDAQ rose 0.75% and the Dow outperformed with a 1.05% increase.

Treasuries were pressured lower over the US morning session following a report showing unit labor costs rose more than expected in 4Q. The US 30-year bond joined the rest of the Treasury market in offering investors a yield of at least 4%. Meanwhile, Treasury yields ended cheaper by 2bp to 8.5bp across the curve, with losses led by the belly, pushing the 2s5s30s fly higher by 5bp on the day; 10-year yields ended around 4.075% after peaking close to 4.09%, the cheapest since November.

The dollar trimmed a gain after Atlanta Fed President Raphael Bostic comments. The dollar rose during the morning New York session following hawkish Federal Reserve comments, an unexpected drop in weekly US jobless claims and upward revision in fourth-quarter labor costs.

  • USD/JPY up 0.4% to 136.70
  • AUD/USD fell 0.4% to 0.6732
  • NZD/USD fell 0.6% to 0.6221
  • EUR/USD fell 0.7% to 1.0598

Gold was little changed at $1,836/oz, Crude oil futures advanced as natural gas prices fell. OPEC’s oil production increased last month as Nigeria extended its recovery ahead of presidential elections. Elsewhere, cryptocurrencies fell and copper lost 2.1% to fetch $4.08/lb.

Global event radar: National People’s Congress (5th Mar), RBA Meeting (7th Mar), BoJ Meeting (10th Mar), US Employment (11th Mar), US CPI Inflation (14th Mar), US Retail Sales (15th Mar), China Activity Data (15th Mar), ECB Meeting (17th Mar), BoE Meeting (23rd Mar), US FOMC Meeting (23rd Mar), Eurozone CPI Inflation (31st Mar).


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Lenny Hayes

Chief Technical Officer