Low Wage Growth Drove US Yields Lower

February 3, 2017 Share Print 0

Employment grew by a hefty 227,000 jobs in January, but the workers’ wage gains were tepid at best, and bond traders see little reason for the Federal Reserve to pick up the pace of interest rate hikes.

“The good news was payrolls were muscular, but the bad news was average hourly earnings only grew 0.1 percent,” said Ward McCarthy, chief financial economist at Jefferies. Wage growth was expected to come in at 0.3 percent. Economists had only expected 175,000 payrolls, and instead got the best job growth since September.

Stock futures rose, the dollar briefly fell, and Treasury yields declined, led by the 2-year. The 2-year Treasury is most sensitive to Fed rate hikes, and its yield fell to 1.16 percent. Ahead of the report, it had been as high as 1.24 percent.

via CNBC

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.