Yields climb on better-than-expected labor data. Treasury yields rose across the curve today as JOLTs job openings data surpassed expectations and the uncertainty surrounding US-Iran peace talks continued. The 2-year yield closed 7 bps higher at 4.17% and the 10-year yield closed 9 bps higher at 4.47%. Meanwhile, equities advanced to close out their strongest quarter in years, led by a continued rebound in technology shares, with the NASDAQ and S&P 500 closing 1.52% and 0.79% higher on the day, respectively.
Strong JOLTs data boosts optimism of labor market resilience. US job openings came in at 7.59 million in May, nearly flat from April’s downwardly revised figure, but well above estimates of 7.30 million. The construction and hospitality industries saw the largest increases in openings, helping to offset weakness in finance and healthcare. The quits rate was nearly unchanged at 3.07 million, while layoffs edged up slightly to 1.71 million. Matthew Martin, a senior US economist at Oxford Economics, said the strong reading had clear implications for Fed policy: “For Fed officials, this means their attention will stay focused on the inflation mandate and ensuring price stability.”
Hammack keeps the door open to a hike as AI stokes inflation. Cleveland Fed President Beth Hammack said that she could support higher rates if inflation fails to moderate, pointing to “insatiable” demand for AI data center infrastructure as a growing source of price pressure. “We’ve got inflation that’s too high and it’s been too high for the past five years,” she said, adding that if the trend continues, “it may mean that we need higher interest rates to bring inflation back down to target.” Hammack declined to specify a threshold for rate hikes, but flagged that resilient consumer spending and a lack of visible restraint in the economy suggest current policy may not be tight enough.