The big market action after a shocking July jobs report was being seen in the bond market Friday morning.
Treasuries were in rally mode as traders moved to price in at least two interest-rate cuts from the Federal Reserve this year. That reversed the moves seen Wednesday after the FOMC meeting, which saw Fed Chair Jay Powell talk down the need for rate cuts.
The yield on 2-year Treasury notes fell by more than 17 basis points to as low as 3.78% Friday morning. The yield on 10-year notes fell by nearly 10 basis points to as low as 4.27%.
Data from the CME Group showed the odds for a September rate cut from the Fed were as high as 75% following Friday’s report.
The July jobs report showed the US economy added just 73,000 jobs last month while revisions to the May and June reports showed more than quarter million fewer jobs were added to the economy than previously reported.
On Wednesday, odds for a September rate cut from the Fed were just 37%.
Just before the release of Friday’s jobs report, two Fed governors — Chris Waller and Michelle Bowman — issued statements explaining their decision to vote against the Fed’s call to keep interest rates unchanged on Wednesday.
Both suggested the US labor market is not as strong as recent data had shown, and that when the labor market turns, it may turn quickly. Waller and Bowman’s dissents on Wednesday marked the first time since 1993 that two members of the Fed’s Board of Governors voted against a policy action at the same meeting.
President Trump, for his part, said Friday morning before the jobs numbers were released the Fed board should “ASSUME CONTROL” as Powell continues to face criticism from the president over his view that interest rates should remain at current levels.