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• Enthusiasm for US stocks is waning
• Some analysts expect OAT-Bund spreads to tighten in the near-term
• Average UK house prices reach a record high in August
• Japan’s wages rose the most in seven months, but rate hike probability does not rise
• China bonds saw renewed selloff despite healthy demand in 30-year auction
Weak US jobs report drives yields lower
Today’s non-farm payroll report for August sent US treasury yields lower on increased expectations for rate cuts this year. The report showed 22k jobs were created in August, compared to expectations of 75k. The yield on the 2-year treasury is 8 bp lower following the release and the yield on the January 2026 Fed Funds future contract is 9 bp lower. Equity markets also edged higher following the report. Immediately preceding the data release, equities and the dollar declined on nervousness regarding technical difficulties, with the Bureau of Labor Statistics website reporting that data retrieval tools were not immediately available. Earlier in the morning, markets had been positive with European equities in positive territory and bond yields largely holding steady. Overnight, Chinese equity markets rebounded with the CSI 300 gaining over 2%. In Japan, wage data showed the strongest growth in wages in 7 months, but despite the release, market expectations for a rate hike by the BOJ dipped somewhat.
