(Updates to afternoon New York trading)
* US job openings surge to 7.618 million in April, exceeding forecasts
* Cleveland Fed’s Hammack says inflation pressures may require action soon
* Oil prices choppy on report that Iran reviewing agreement
NEW YORK, June 2 (Reuters) – U.S. Treasury yields were slightly lower on Tuesday after data showed a jump in job openings, while conflicting signals on progress in peace talks between the U.S. and Iran buffeted oil prices. Iran is reviewing a proposed agreement with the U.S. to halt the war, Iranian media reported, after U.S. President Donald Trump said talks to reach a deal were continuing. U.S. Secretary of State Marco Rubio also said that Trump’s negotiating team had not offered Iran sanctions relief in exchange for reopening the Strait of Hormuz and insisted any such relief was tied to Tehran giving up its nuclear program. Yields climbed on Monday on a report that Tehran’s negotiating team was stopping exchanges of messages with the U.S. through mediators. Oil prices surged after that report. U.S. crude rose 1.44% to $93.49 per barrel and Brent was up 0.76% to $95.70 per barrel in a choppy session that saw both contracts down by more than $2 earlier in the day.
JOB OPENINGS SURGE Yields pared declines after the U.S. Labor Department reported that job openings surged 731,000 to 7.618 million by the last day of April, the highest level since May 2024, and well above the 6.88 million forecast by economists polled by Reuters.
“Are we finally exiting the ‘no-hire, no-fire’ mire? Possibly. Job openings surged in April,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. “People still aren’t quitting and layoffs are low, but the tide could be turning for the labor market.”
Some analysts noted, however, that the jump in openings was largely limited to one sector and the hiring rate did not increase. The data marked the first in a string of reports on the labor market this week, culminating in the release on Friday of the closely watched government payrolls report for May. The yield on the benchmark U.S. 10-year Treasury note fell 2.2 basis points to 4.455%. After hitting a 16-month high of 4.687% on May 19, the yield has been declining on optimism that a U.S.-Iran peace deal could be achieved.
The yield on the 30-year bond shed 2.4 basis points to 4.967%.
Cleveland Federal Reserve President Beth Hammack said the U.S. central bank may need to raise interest rates soon to combat inflation pressures that are already too high and trending in a worrisome direction. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is seen as an indicator of economic expectations, was at a positive 40.8 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, dipped six-tenths of a basis point to 4.045%. After beginning the year pricing in roughly 50 basis points worth of cuts from the Fed this year, market expectations have shifted to price in a slight possibility of a rate hike. Expectations for a hike of at least 25 basis points at the central bank’s last meeting of the year in December currently stand at about 50%, according to CME Group’s FedWatch tool, up from 9.3% a month ago.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.535% after closing at 2.544% on Monday.
The 10-year TIPS breakeven rate was last at 2.399%, indicating the market sees inflation averaging about 2.4% a year for the next decade.
(Reporting by Chuck Mikolajczak; Editing by Andrea Ricci and Paul Simao)
