Weak jobs report kills rate-hike fears — time to load up on long-term bonds
The June jobs report was a disaster, with only 57,000 jobs added versus the 115,000 expected. This instantly killed any threat of the Federal Reserve raising interest rates, causing bond prices to surge. When rate hikes are off the table, bonds become highly attractive.
Idea
The economy added barely half the jobs expected in June, signaling a rapid cooling in the labor market. Because the Federal Reserve uses job strength to justify raising interest rates, this weak report effectively takes the threat of higher rates off the table. We can see markets immediately pricing this in: Treasury bonds just had a massive rally as traders scaled back their rate-hike bets. When interest rates stop climbing or start falling, the bonds you already hold become more valuable. Buying long-dated Treasury ETFs captures this shift and pays you to wait if the economy continues to slow.