If the Fed acts too quickly in tightening monetary policy, analysts fear it could lead to a recession.
The Labor Department released figures on Friday showing that employers added 390,000 jobs last month, better than expectations for 322,500.
That sent Treasury yields climbing, though they initially wobbled as investors moved from one knee-jerk reaction to another following the report’s release.
The yield on the two-year Treasury, which tends to move with expectations for Fed action, rose to 2.66% from 2.62%.
The 10-year yield, which tracks expectations for longer-term growth and inflation, rose to 2.96% from 2.91% after earlier climbing as high as 2.99%. It settled at 2.95%.
“As Fed speakers consistently remind us that the path towards draining inflationary pressures from the economy is going to be ‘bumpy’ and ‘painful’ the market agrees as it navigates between seeing the next recession around the corner to witnessing a still healthy economic backdrop,” Quincy Krosby, chief equity strategist for LPL Financial, told The Post.
“For now, the market sees a Federal Reserve trying to navigate a painful and bumpy road, yet trying to find a soft exit,” Krosby said.
And the market finds itself between wanting to believe in the rallies but not believing that the Fed can negotiate a soft landing.