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- US payrolls weaker than expected
- US Treasury yields expected to rise further
- High yields draw investors into US investment-grade corporate bonds
- Yen strengthens on possible signaling shift and intervention speculation
- Korean equities slump as concerns over AI overcapacity drove selloffs in chipmakers
- Weekly EM bond issuance rises to $32.2 bn
Yields Ease Following Disappointing US Payrolls While Chip Stocks Weigh on Equities
US Treasury yields eased and the dollar weakened after the June payrolls report came in below expectations. The Bloomberg Dollar Spot Index fell while Treasury yields were lower across the curve after data showed a sharp slowdown in US hiring, even while the employment rate declined. European sovereign yields remained higher on the day, despite easing after the US data. Global markets had been choppy ahead of the payrolls report, as renewed pressure on technology stocks weighed on Asian equities, while lower oil prices and a weaker dollar provided some offset. Korean equities were sharply lower as chipmakers sold off on concerns over AI overcapacity, while European equities traded higher. The yen strengthened on speculation that Japanese authorities could intervene imminently, potentially with less advance signaling than before. Oil prices continued to decline as disruption concerns eased and investors reportedly weighed signs of ample supply. On the data front, Swiss inflation slowed in June, in line with expectations, while Peru inflation surprised to the upside. Elsewhere in emerging markets, some analysts see further room for the rotation into EMEA equities that benefit from lower geopolitical risk.
