US Jobs Surge Pushes Treasury Yields Higher, Fed Rate Cuts Move Further Out

Strong Payrolls Shake Up Rate-Cut Expectations
The US labor market surprised investors with a robust 130,000 increase in Nonfarm Payrolls for January, nearly doubling economists’ expectations of 70,000. The jobless rate fell from 4.4% to 4.3%, reinforcing confidence in a solid labor market and cooling speculation about near-term interest rate cuts by the Federal Reserve.


Treasury Yields Climb Across the Curve


Following the strong jobs report, the 10-year Treasury yield jumped to 4.155%, rising from roughly 4.125%. Yields across other maturities also moved higher as investors recalibrated expectations for monetary policy, pushing anticipated rate cuts further into the year, now pointing to July 2026 for the first potential reduction.


Dollar Softens, Precious Metals Gain


The US Dollar Index dipped slightly to 96.75, giving gold and silver a modest boost. Gold reclaimed the $5,100 per ounce mark, while silver rebounded sharply, as markets adjusted to the idea of slower-than-expected Fed easing. Inflation expectations for the next 5 to 10 years remained near the Fed’s 2% target, signaling confidence in moderate price growth over the medium term.


Markets Eye Upcoming Data


Investors are now focused on upcoming consumer inflation data and weekly jobless claims, which could influence the Fed’s next moves. Analysts anticipate a slight slowdown in both headline and core inflation for January, potentially nudging the market toward more cautious projections for rate adjustments later this year.


Investor Takeaway: Strong Jobs, Cautious Optimism


While the strong labor data underscores the resilience of the US economy, the shift in interest rate expectations highlights the delicate balance facing policymakers. For now, markets are recalibrating, with safe-haven assets like gold benefiting, and rate-sensitive sectors adjusting to a longer timeline for potential monetary easing.