U.S. employers unexpectedly cut payrolls in July, denting expectations for
further Fed tightening and sending Treasurys higher. The two-year Treasury
yield, most sensitive to Fed policy, fell 8bp to 4.16% on Friday as markets
trimmed odds of near-term hikes. The 10-year yield declined 6bp to 4.62%. BLS
data showed nonfarm payrolls fell 23,000 in July, with substantial downward
revisions to the prior two months. The unemployment rate eased to 4.1% while the
labor force participation rate continued to decline. Market participants said
the report reduced the likelihood of a Fed rate increase in September.
