The US economy continues to produce more jobs despite the being close to full employment. The buoyant conditions have eaten into the under-employment rate and annual increases in hourly pay have hit a new post-GFC high.
According to the US Bureau of Labor Statistics, the US economy created 20,000 jobs in the non-farm sector in February. Economists had been expecting around 180,000 additional positions.
US bond yields finished the day slightly lower across the curve while the US dollar was weaker against other major currencies except for sterling. 2-year, 10-year and 30-year Treasury bond yields all slipped 1bp to 2.46%, 2.63% and 3.02% respectively.
The figures had little impact on expected Federal Reserve policy and the current expectation is of no change in the federal funds rate during 2019. However, a small probability has been assigned to a rate cut at the FOMC’s December meeting, although this possibility has been around since late last year.
