Treasury yields hold steady before July jobs report

“As we buy more time for therapeutics and a vaccine, its’s critical the employment data continues to show progress even if it disappoints to the downside. Most of the higher frequency data has pointed to a slowing of the economic rebound,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.

U.S. Treasury yields showed little direction early Friday ahead of the monthly employment report that could show if the American labor market’s recovery is continuing apace.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.539% ticked 0.5 basis point lower to 0.531%, while the 2-year note rate TMUBMUSD02Y, 0.121%stood at 0.117%. The 30-year bond yield TMUBMUSD30Y, 1.204% retreated 1.4 basis points to 1.187%.

What’s driving Treasurys?

All eyes were on the July jobs report due at 8.30 a.m. ET as analysts remain uncertain how the U.S. economic recovery is faring at the start of the third quarter. Rising coronavirus cases across several states has stalled economic activity as local governments reassert restrictions on social activities.

The consensus of economists polled by MarketWatch points to an increase of 1.7 million jobs in July, but those estimates range widely from a decline of 280,000 to a gain of 4 million. The unemployment rate is expected to fall to 10.6%, and average hourly earnings are forecast to shrink by 0.5%.

A weaker-than-expected jobs report could spark another rally in government bonds even with yields hovering at or near record lows, according to market participants.

U.S.-China tensions looked set to heat up after the Trump administration announced an executive order banning all transactions between U.S. businesses and China’s social media app TikTok and WeChat.

What did market participants’ say?

“As we buy more time for therapeutics and a vaccine, its’s critical the employment data continues to show progress even if it disappoints to the downside. Most of the higher frequency data has pointed to a slowing of the economic rebound,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.