U.S. 10‑year Treasury yields climbed from 4.746% to 4.823% after the Labor Department reported that August nonfarm payrolls increased by 162,000 jobs, far above the 55,000 jobs consensus.
The unexpected employment gain revived market expectations of a Federal Reserve rate hike in September, lifting the probability of a hike back toward 50% after earlier being pushed lower.
Fed Governor Christopher Waller had earlier suggested at a Reuters NEXT event that the central bank could hold rates steady if disinflation persisted, but the payroll surprise gave Chair Kevin Warsh and other hawkish members more leeway to consider tightening.
Crude oil prices stayed above $90 a barrel, with Brent near $96, as recent U.S.–Iran strikes in the Strait of Hormuz constrained vessel traffic and heightened cost‑push inflation concerns.
Bond strategists warned the 10‑year yield could breach the 5.0% level, noting that a surge in high‑grade corporate bond issuance to fund AI infrastructure has crowded out sovereign Treasuries and forced underwriters to offer higher yields.
Fixed‑income desks are now turning to the upcoming August Consumer Price Index release as the decisive data point before the Fed’s September policy decision.
