Treasury yields dip despite anticipation over June jobs report

  • The U.S. Labor Department is due to release its June jobs report at 8:30 a.m. ET on Friday.
  • Economists expect 706,000 jobs to have been added in June.

U.S. Treasury yields dipped early on Friday, despite anticipation over a key jobs report, due out later in the morning.

The yield on the benchmark 10-year Treasury note fell to 1.454% at 4:15 a.m. ET. The yield on the 30-year Treasury bond slipped to 2.053%. Yields move inversely to prices.

Treasurys

The U.S. Labor Department is due to release its June jobs report at 8:30 a.m. ET on Friday.

Economists expect 706,000 jobs to have been added in June, while the unemployment rate is projected to have dropped to 5.6% from 5.8%. That is compared to 559,000 jobs created in May.

Average hourly earnings are expected to have jumped 0.3% in June over May, and on a year-over-year basis were expected to rise by 3.6%, after a 1.98% increase in May.

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Investors will likely be paying close attention to changes in the average hourly earnings, for any sign of a jump in wages, as it could precede broader inflation in the U.S. economy.

An improving labor market and higher inflation are both economic indicators which could prompt the Federal Reserve to tighten monetary policy sooner than expected.

Julian Howard, head of multi-asset solutions at GAM, told CNBC's "Squawk Box Europe" on Friday that the June jobs report was "extremely important," as he argued that labor market data had been "the one thing that has sort of held the Fed back from being more aggressive around raising interest rates."

"We all know historically that wages are one of the biggest components of inflation, but if the job numbers improve, that's gonna push wage inflation up and then I think we're going to get a more broad-based inflation picture," he said.

Howard explained that the labor market recovery had been centered on the areas of the economy that have suffered during the coronavirus pandemic, which had given "the Fed the sort of excuse they need to just kind of hold off for the time being" on tightening policy.

However, he believed the Fed would "start running out of excuses if the jobs numbers start to accelerate markedly from now on."

Meanwhile, factory orders data for May is due out at 10 a.m. ET on Friday.

There are no auctions scheduled to be held on Friday.

CNBC's Thomas Franck contributed to this market report.

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