Close this search box.

Explore the world.

Assess underlying market conditions and fundamentals in the world's major economies.


Stay ahead.

Follow the biggest stories in markets and economics in real time.


Get insight into the latest trends and developments in global currency markets with breaking news updates and research reports delivered right to your inbox.

After signing up, you will receive regular newsletters from Corpay, and may unsubscribe at any time. View Corpay’s Privacy Policy

US yields remain aloft ahead of non-farm payrolls report

The dollar is rangebound and risk-sensitive currencies are licking their wounds after suffering steep losses in yesterday’s session as strong economic data sent US yields rocketing to a 16-year high.

The ADP Research Institute kicked things off by saying US companies added 497,000 jobs in June, almost twice the consensus forecast. The Bureau of Labor Statistics followed up with data showing a modest increase in the number of initial claims for unemployment benefits, but countered that with a reduction in continuing claims. A later report said job openings fell to 9.82 million at the end of May, down from an upwardly revised 10.3 million in April as labour markets remained historically tight. And the Institute for Supply Management said its index of services activity rose to 53.9 in June from 50.3 in May, suggesting that the biggest sector in the US economy is moving back into expansionary territory.

We don’t think the ADP numbers provided meaningful guidance ahead of this morning’s payrolls print: except over very long time periods, historical correlations between the two reports are almost non-existent. But the overall thrust of the data leaves no question labour markets remain hot enough to support – and justify – further rate hikes from the Federal Reserve.

Ahead of the non-farm payrolls report at 8:30, Bloomberg consensus forecasts suggest 230,000 jobs were added in June, down from the previous month’s 339,000 but still well above pre-pandemic averages. The unemployment rate is seen correcting lower to 3.6 percent from 3.7 percent in the prior month, and average hourly earnings could soften to a 4.2 percent year-over-year gain from the previous 4.3 percent.

The “whisper number” is now likely closer to the 275,000 mark, but a range between 200,000 and 300,000 is likely to keep rate expectations relatively firm into the July Federal Reserve meeting. According to the CME’s Fed Watch tool, investors are currently assigning 92.4 percent odds to a quarter-point hike on the 26th, with roughly a third of market participants expecting a final move in the autumn. Ten-year Treasuries are yielding more than 4 percent for the first time since the Silicon Valley Bank blowup in early March, and the two-year is holding near its highest levels since 2007.

Japanese workers saw wages jump at more than twice the expected pace in May, bolstering bets on a policy adjustment from the Bank of Japan and helping the yen push higher. Data released last night showed nominal cash earnings climbing 2.5 percent from the same period a year earlier, smashing forecasts that had been set closer to 1.2 percent – but with inflation rising even faster, workers lost purchasing power in real terms. The currency has staged something resembling a short squeeze this week, climbing against the dollar even as US yields have marched higher – but this could unwind if jobs numbers manage to surprise in the next half hour.

Euro Crisis Flashbacks Hit Markets
European political nerves
Market Calm Returns
US inflation vs the Fed
Fed Signals One Cut in 2024, Down From Three
US Inflation Decelerates Sharply, Bolstering Rate Cut Odds

Latest Analysis

Latest Analysis