Investors, traders and other bond market participants noticed a drop in US government bond yields on Thursday, August 31 this year. According to the statements and comments of the analysts of brokerage companies in connection with the financial strategists of the bond market, this current situation is a reflection of investor sentiment, when the markets are waiting for the monthly economic data from the labor market in the United States of America, which will be reported as early as tomorrow, on Friday, September 1 .2023 as data for the month of August 2023.
It is these key data of the US labor market, such as the number of newly created non-agricultural jobs, the amount of unemployment and the average wage, that are the main indicators that can provide a realistic view of the current state of the US economy. Investors are thus waiting for these data and with regard to their investment sentiment in because of this, their interest in US government bonds decreased and, consequently, so did their real returns achieved by the bond market. Currently, during the European Thursday afternoon on 31/08/2023, at approximately 14:47 CET, the 10-year US bond traded at a yield value of 4.11% per annum and the two-year US bond fell by 1.9 basis points to the value of its yield of 4.869% per annum. However, according to information from economic correspondents, the exchange value of the US dollar (USD) maintained a trading trend of strengthening and, according to the dollar index DXY (US Dollar Currency Index), during the European Thursday afternoon on 31/8/2023, from the beginning of this trading day, it has gained more than half a percent of its daily point value. value and moved at a point level of USD 103.69 points with a daily growth of + 0.52% of the point value according to this index.
Another factor influencing the state of the financial markets, including the bond market, is the reaction of investors and traders at the beginning of this 35th week of 2023 to the speech of the head of the central bank of the US Federal Reserve System (FED), Mr. Jerome Powell, who, as part of the traditional Economic Symposium in Jackson Hole in his speech stated that the current already high level of interest rates in the US will continue for some time and even further increases are possible. Investors had previously hoped that the last interest rate hike by the Federal Open Market Committee Federal Reserve System (FOMC) in July 2023 marked the end of the rate hike cycle that began in March 2022 last year to cool the economy and fight inflation. Current economic data released during yesterday’s Wednesday 30/09/2023 showed that the United States of America (US) economy may be so-called “pulling back”, with the gross domestic product (GDP) for the second quarter of this year 2023 being revised downwards to 2, 1% of its annual growth rate.
According to ADP (Automatic Data Processing, Inc.) trade estimates released on Wednesday, August 30, 2023, private employers added 177,000 new jobs in August, well below the revised total of 371,000 jobs added in July 2023. Furthermore, economists in the Dow Jones survey expected at least 200,000 new jobs to be added in August. According to the statements of economic reporters in connection with analysts of brokerage companies and financial strategists of investment banks, if this ADP estimate from the Wednesday of this 35th week of 2023 is confirmed or the published official data of the US Department of Labor on Friday, September 1, 2023 will be close to this state, then it is a highly probable decline not only in US government bond yields, but also in the exchange value of the US dollar (USD) itself. In view of these facts, these experts, taking into account the so-called inverse rule, predict, on the contrary, an increase in the price of investment gold and a strengthening of the exchange value of the single European currency, the euro (EUR) against the USD. Currently, during the European afternoon of 31/08/2023, the exchange rate of this currency pair EUR/USD was in the amount of 1.85 USD per EUR, with the daily decrease of EUR by – 0.723% against the USD.
