CoPay's chief market strategist, Carl Shamotta, noted that last month's US job creation accelerated dramatically, further strengthening expectations of a rate hike at this month's Federal Reserve meeting. According to the Labor Department's August employment report, nonfarm payrolls rose by 162,000 from the previous month, significantly exceeding market expectations. More importantly, while the unemployment rate held steady at 4.1%, average hourly earnings rose 0.3% month-over-month, accelerating from the 0.1% increase in the prior month, and were up 3.1% year-over-year, suggesting that labor demand still outpaces supply. As aging and immigration enforcement slow the growth of the US labor force, detailed indicators beyond the headline figures have become more important. With traders anticipating a rate hike in two weeks, the dollar pared some of its previous day's losses, and US Treasury yields rose, particularly in the short-term segment.
Strong jobs data and wage growth increase likelihood of Fed rate hike, pushing policy rate up.
Rate hike expectations drive Treasury yields higher, especially short-term, lifting 10Y yield.
