US government bond prices fell on Friday, especially in the longer term. On the market, unexpectedly good labor market data were cited as the reason for the fact that instead of the government backed bond papers, riskier investments, for example equities, were in demand. However, the impact of short-term bonds was lower.
Although the employment rate rose sharply by 222,000 in June which was better than expected, the employment figures also included negative aspects. Thus the hourly wages had risen weaker than expected. The US Federal Reserve Fed observes this precisely because they are a prerequisite for inflation and thus also the interest margin. However, a third interest rate increase this year is still likely to be on the market.
Ten-year bonds yielded 2.389 percent, the top level since May 11, versus 2.369% Thursday. The yield has moved up 0.247 percentage point in the past 2 weeks, the biggest two-week increase not seen since the week ending March 10. Yields rise as bond prices fall. Two-year bonds settled at 1.403 percent. Five-year bonds saw its yield at 1.952 percent. Long bonds with a term of thirty years were recorded at 2.935 per cent.
“The bond market is starting to realize that the era of easy money is going to come to an end,” said Ken Taubes, chief investment officer of U.S. investment management at Amundi Pioneer.
Bank of America Merrill Lynch economists in a note from Friday said “Tightening by the Fed [and] rhetorical tightening by European Central Bank has already succeeded in raising bond yields, volatility, reducing tech stocks. Summer 2017 = massive inflection point in central bank liquidity trade … will likely lead to Humpty-Dumpty big fall in market in autumn, in our view.”
Separately, US President Donald Trump has confirmed his “America First” strategy in a videotape broadcast parallel to the G20 summit. In a combative and keen tone, he lamented “the global theft” of American jobs and declared that the “era of American surrender” was over. The comments Trump made in his weekly radio and video. These speeches to the American people are recorded in advance.
For decades jobs from the American communities, cities and industries had been “torn”, said Trump. “Foreign nations were rich in American costs. Many special interests benefited from this great global theft of American wealth.” Since his commission, his government had vigorously represented the “America First” philosophy, the Republican continued. “And believe me, it’s time.”
