Bond traders scrap bets on July rate cut after strong jobs data

Shorter-term Treasuries, which are most sensitive to expectations for Fed policy, led the slump. Two-year yields rose almost 10 basis points, while 10-year rates jumped 6 basis points to 4.34%. The dollar advanced versus its major counterparts.

“The Fed will take the summer off,” said Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities. “The needle for the Fed to move was employment” and this report gives Fed Chair Jerome Powell room for a wait-and-see approach to easing policy.

Interest-rate swaps showed traders saw almost no chance of a Fed rate reduction at the July 29-30 meeting, compared with the roughly 25% probability seen before the report. The…