The US economy continues to produce more jobs despite being close to full employment. However, the buoyant conditions are enticing Americans back into the workforce, which increases the unemployment rate in some months.
According to the US Bureau of Labor Statistics, the US economy created 304,000 jobs in the non-farm sector in January. Economists had been expecting around 165,000 additional positions and US markets reacted by sending bond yields higher.
US bond yields finished the day higher across the curve while the US dollar was largely unchanged against other major currencies. 2-year Treasury bond yields finished 3bps higher at 2.49%, 10-year yields increased by 5bps to 2.68% and 30-year yields were 3bps higher at 3.03%.
The figures had little impact on expected Federal Reserve policy as the probability of rate rises had already been pruned right back. According to cash futures prices, the implied probability of a rate rise by the US FOMC at its March meeting moved from just 2% to zero while the chance of a June rate rise also moved to zero.