Yields steady amid solid jobs report, tariff fight

  • The Department of Labor said that total nonfarm payrolls increased by 157,000 for the month, below the 190,000 expected.
  • Also weighing on Treasury yields was an announcement from the Chinese government that the country will slap an additional $60 billion in tariffs on U.S. goods.

U.S. government debt yields slipped Friday after the U.S. government reported that payroll growth slowed in July and an announcement from the Chinese government that Beijing will impose tariffs on roughly $60 billion in U.S. goods.

The Department of Labor said that total nonfarm payrolls increased by 157,000 for the month, below the 190,000 expected by economists polled by Reuters. The unemployment rate fell one-tenth of a percentage point to 3.9 percent, as expected, and is around its lowest level in nearly 50 years.

A tightening labor market and healthy domestic demand have spurred worries of an overheating economy and continued interest rate increases by the Federal Reserve.

But despite the robust labor market, wage growth remains sluggish; average hourly earnings rose 2.7 percent over the same period a year ago, or 0.26 percent over the last month.

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The Fed's preferred inflation gauge, the personal consumption expenditures (PCE) price index minus the volatile food and energy segments increased 1.9 percent in June. The core PCE hit the central bank's 2 percent inflation target in March for the first time since 2011.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.952 percent, while the yield on the 30-year Treasury bond was also lower at 3.094 percent.

Also weighing on Treasury yields was an announcement from the Chinese government that the country will slap an additional $60 billion in tariffs on U.S. goods.

The import taxes would range in rates from 5 percent to 25 percent, the Chinese government said. There are four lists of goods, one for each of the rates proposed. Many of the goods listed as targets are agricultural or industrial commodities.

"The implementation date of the taxation measures will be subject to the actions of the US, and China reserves the right to continue to introduce other countermeasures," China's release said. "Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties."

China declared it will impose these new tariffs if the U.S. places more tariffs on Chinese imports. President Donald Trump is considering the U.S. raise proposed tariffs on $200 billion of Chinese goods to 25 percent from the 10 percent rate his administration is currently mulling, the administration announced Wednesday.

—CNBC's Michael Sheetz contributed to this report.