Jobs Report Boosts Hopes for September Rate Hike

The US interest rate forecast has turned more hawkish following the strong August jobs report. The economy added 162,000 jobs in August, pushing the 2-year Treasury yield as high as 4.41% and increasing expectations of a September Fed rate hike.

However, slower wage growth and a low quits rate give the Federal Reserve some room to wait before making any further interest rate adjustments.

The strong inflation data could support a 25 basis point hike and push the 10-year Treasury yield above 5%, but softer inflation would strengthen the case for keeping rates unchanged.

Until the Fed provides clear policy guidance, the US dollar is likely to remain volatile.