US hiring rose in August, but pay growth slowed and the unemployment rate reached its highest level since February 2022.

The Fed should finish tightening monetary policy, and interest-rate exposure should be tolerated more than in recent months.

Two-year Treasury yields fell 11 basis points to 4.75% before recovering, but swaps traders are pricing in a less than 50% likelihood of raising rates again this tightening cycle.

Long-term yields rose, with the 10-year note up 7 basis points at 4.18%. US money-market mutual funds are expected to raise more capital in 2023 than in the preceding decade as investors seek yields higher than bank-deposit rates.

The swaps market expects a quarter-point rate drop from the US central bank by May, but it is unlikely until later next year. Treasuries are more tempting due to the Fed’s potential rate decrease in 2024.