US August payrolls beat expectations, reviving bets the Federal Reserve may
tighten at its Sept. 16 meeting. US Treasures sold off, the dollar strengthened
and the S&P 500 fell on Friday but still logged a weekly gain. The bond
repricing has not triggered a broad flight to safety: credit spreads remain near
lows and pressure on corporate debt and equity indices is limited. JP Morgan
says Treasury market liquidity has deteriorated materially, but corporate bond
ETFs and equity index futures have not shown comparable stress. Market
resilience is underpinned by solid growth and corporate earnings, with AI-driven
capex supporting large tech investment. Traders are focused on the speed of any
further yield rise rather than the single payrolls print; upcoming inflation
data and whether the Fed revises its tightening path will drive the next moves.
A rapid further increase in yields could force investors to reduce risk
exposure.
