Treasuries Get Hit as Stocks Jump on Jobs Surprise: Markets Wrap

(Bloomberg) — Bonds fell and the dollar rose as stronger-than-forecast employment growth soothed concern the US economy is poised to slow, stanching speculation the Federal Reserve will need to cut interest rates any time soon. Stocks hit fresh all-time highs.

Treasury two-year yields surged 10 basis points to 3.88%. Swap traders saw almost no chance of a July Fed cut, compared with a roughly 25% probability seen before the data. The chance of a move in September ebbed to about 70%. The S&P 500 climbed 0.8%. After the close of trading in a shortened pre-holiday session, the House passed President Donald Trump’s tax bill.

Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.    

US job growth exceeded expectations in June as a surge in public education employment masked a slowdown in hiring across the rest of the economy. Payrolls increased 147,000 and the jobless rate declined to 4.1%. Average hourly earnings increased 0.2% from May and 3.7% from a year ago — the smallest since July 2024.

“The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut,” said Jeff Schulze at ClearBridge Investments. “A wage-price inflationary spiral shouldn’t be a near-term concern, setting up something resembling a ‘Goldilocks’ scenario.”

Earlier Thursday, Treasury Secretary Scott Bessent questioned Fed officials’ judgment on rates, reiterating his view that two-year yields are a signal their benchmark rate is too high.

“The committee seems to be a little off here in their judgment,” Bessent said in an interview on Fox Business, referring to the Fed’s rate-setting Federal Open Market Committee.

In a Bloomberg Television interview, Bessent dismissed the idea that the dollar’s recent declines raise concerns about its status as the world’s key currency.

Headline numbers from the June jobs report took pressure off the Fed to consider a rate cut later this month, but the solid figures masked weakness in private payrolls and other potential warning signs of deterioration in the labor market. That’s a trend that could raise the stakes later in the year.

“While today’s report points to still firm job creation, we don’t think the underlying details of the report are as supportive as suggested by the top-line beat,” said Oscar Munoz and Gennadiy Goldberg at TD Securities. “The story of a low-fire, low-hire labor market continues to hold for now.”

To Sameer Samana at Wells Fargo Investment Institute, there are enough positive drivers for markets to make additional gains, but there may be some near-term volatility as issues like tariffs need to be resolved.

With the Fed likely waiting until later this quarter or the next one before cutting rates, the stock market is likely to ignore the greater macroeconomic picture in the short run and focus much more on the start of the earnings season in mid July, said Chris Zaccarelli at Northlight Asset Management.

“We have been encouraged by the rapid recovery of the stock market these past three months, but are concerned that valuations are high and that a lot of the good news is already priced in,” he noted. “So the market is much more vulnerable to negative surprises at this point.”

To David Laut at Abound Financial, valuations aren’t a concern right now as “the market has too much inertia and there is room for valuations to expand.”

“We are sticking with the winners, which includes growth stocks, which have led the market since the April lows,” he said. “Growth has led us out of the downturn and we would expect this category to broaden out across company market caps, especially as interest rates decline.”

Corporate Highlights:

• President Donald Trump’s administration has lifted recent export license requirements for chip design software sales in China, as Washington and Beijing implement a trade deal for both countries to ease some restrictions on critical technologies.
• CoreWeave Inc. said it has received the market’s first artificial intelligence server system based on the newest, high-end Nvidia Corp. chip, a sign of its rising stature in the competitive AI cloud-computing space.
• Rivian Automotive Inc. and Lucid Group Inc. rallied as BNP Paribas sees the EV makers benefiting Trump’s tax and spending bill ending electric-vehicle tax credits.
• United Parcel Service Inc. plans to offer voluntary buyouts to union-represented delivery drivers for the first time in the company’s history as part of an effort to boost profit by slimming down its operations.
• BlackRock Inc. is considering a sale of its stake in the leasing rights to Saudi Aramco’s natural-gas pipeline network back to the energy giant, according to people familiar with the matter.
• Volkswagen AG’s Audi won’t increase prices in the US in July after its sales there nosedived in the second quarter.
• Zurich Insurance Group AG agreed to buy BOXX Insurance Inc, a Canadian cyber risk management firm, marking the Swiss insurer’s latest push into the insurance technology sector

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.8%
• The Nasdaq 100 rose 1%
• The Dow Jones Industrial Average rose 0.8%
• The MSCI World Index rose 0.7%
• Bloomberg Magnificent 7 Total Return Index rose 0.9%
• The Russell 2000 Index rose 1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.4% to $1.1752
• The British pound was little changed at $1.3645
• The Japanese yen fell 1% to 145.09 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $109,595.62
• Ether fell 0.5% to $2,578.24

Bonds

• The yield on 10-year Treasuries advanced seven basis points to 4.35%
• Germany’s 10-year yield declined five basis points to 2.62%
• Britain’s 10-year yield declined seven basis points to 4.54%

Commodities

• West Texas Intermediate crude fell 0.8% to $66.93 a barrel
• Spot gold fell 0.9% to $3,328.88 an ounce

©2025 Bloomberg L.P.