Bond Yields Surge as Fed Rate Cut Expectations Shift to September

Treasury yields jumped sharply after stronger-than-expected jobs data crushed expectations for near-term Federal Reserve rate cuts. The Bureau of Labor Statistics reported 147,000 nonfarm payroll additions in June—far exceeding economists' 110,000 forecast—while unemployment unexpectedly dipped to 4.1%.

Equities rallied on the labor market strength, with the Dow gaining 381 points (0.9%) and the Nasdaq climbing 1%. The upbeat figures overturned concerns sparked by ADP's earlier report showing private sector job losses.

Interest rate futures now price a 95% probability of unchanged rates at the July FOMC meeting. Market participants have pushed back expectations for policy easing to September at the earliest, reflecting renewed confidence in economic resilience.