(Bloomberg) -- US Treasury yields slid after mixed US labor market data left traders holding tight to wagers on Federal Reserve interest-rate cuts this year.

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The two-year Treasury note’s yield, more sensitive than longer maturities to changes in the Fed’s policy outlook, fell as much as 8 basis points to 4.62%. While the US government’s June employment report showed that job creation was above forecast, prior months were revised lower and the unemployment rate rose.

Derivative traders were steadfast on the odds of lower US borrowing costs in 2024. They are pricing in about a 70% chance that policymakers cut rates as soon as September. For all of 2024, the contracts imply a total of 48 basis points of rate reductions.

“These numbers show a continued slowing in the labor market, with a focus on the rising unemployment rate and revisions to the establishment numbers, which have been highlighted by Chair Powell of late,” said Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities. “It’s a Fed and US Treasury market friendly number. The Fed will be very vigilant around the employment market moving forward.”

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