Fed Rate Cut Bets Pull Back as Payrolls Beat Forecasts
U.S. nonfarm payrolls increased by 147,000 in June, beating the 110,000 consensus, with the unemployment rate edging down to 4.1%. This eased concerns of a softening labor market following weaker ADP private hiring data earlier in the week.
Treasury yields rose in response, with the 2-year yield climbing 9.5 bps to 3.884% and the 10-year yield up 4.9 bps to 4.342%, reflecting a repricing in Fed cut expectations. The dollar advanced 0.77% to 144.780 against the yen and 0.58% to 0.797 against the Swiss franc, while the euro slipped 0.47% to $1.1743.
Trade Tensions with Vietnam and Tariff Headlines in Focus
Trade developments remained in focus after former President Trump announced a deal with Vietnam, imposing a 20% tariff on Vietnamese imports and a 40% levy on goods transshipped through the country. The Vietnamese dong fell to a record low, with analysts expecting the central bank to allow gradual depreciation to offset export tariff burdens.
Talks with Japan and South Korea showed limited progress, adding to global trade risks that could influence safe-haven flows and support the dollar.
Treasury Market and Fiscal Headlines: Watching Deficit Expansion
The advance of Trump’s $3.3 trillion deficit bill, which passed the Senate and returned to the House, is being monitored for long-term debt sustainability concerns but could provide near-term fiscal stimulus, indirectly supporting the dollar’s firmness against peers.
