US Treasury yields drop across the curve on Friday amid growing speculation that the Iran-Oman deal is about to be sealed, which has so far pushed energy prices lower, while investors also digest a weak Nonfarm Payrolls report in the US.
Yields slide across the curve as Oil declines, payrolls disappoint and traders price out September Fed tightening
Recently, a US official said that there has been progress between Oman and Iran on Hormuz, and that once a deal is announced to restore shipping without impediments, the US Navy will lift the blockade of Iranian ports.
West Texas Intermediate (WTI), the US crude benchmark, extended its losses of nearly 1%, down to $77.50.
Meanwhile, money markets are indicating a lower likelihood that the Federal Reserve (Fed) will hike rates in September. The probability has decreased to 30% from 58% yesterday, with a 70% chance that the Fed will keep rates steady, based on Prime Terminal data.
The US 10-year Treasury note is yielding 4.651%, down nearly three basis points, a signal that market participants have begun to price out a quick resolution to the US conflict, which could reduce the need for a rate hike by the Fed.
In July, US Nonfarm Payrolls declined by 23K jobs, falling short of the expected 80K increase. Revisions for May and June reduced the total by 103K jobs, lowering previous estimates. While this data backs the Fed’s decision to pause rate hikes, the Unemployment Rate decreased slightly from 4.2% to 4.1%.
The Greenback tumbled on the report, as the US Dollar Index (DXY), which measures the US Dollar’s strength against six other currencies, fell 0.42% to 99.54.
Next week, investors are eyeing the release of US inflation on the consumer and producer sides, followed by jobless claims data and the University of Michigan (UoM) Consumer Sentiment.
US 10-year Treasury yield chart
