Bonds & Stocks
Treasury yields surged after data showing US labor market strength bolstered speculation the Federal Reserve will have room to raise interest rates twice more this year. Bonds retreated across the curve, with two-year yields - which are more sensitive to imminent policy moves - jumping 16 basis points to 4.87%. The dollar erased losses. Swap markets indicate a 50% chance of a second hike by year-end. S&P 500 contracts wavered.
Economy
Federal Reserve Chair Jerome Powell said at least two interest-rate increases are likely necessary this year to bring the inflation rate down to the US central bank's 2% target and that acting at consecutive policy meetings isn't "off the table." "A strong majority of committee participants expect that it will be appropriate to raise interest rates two or more times by the end of the year," Powell said Thursday, referencing the policy-setting Federal Open Market Committee. "Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go."
World
China's regulators are stepping up scrutiny of currency trading and cross-border capital flows, according to people familiar with the matter, as the yuan slides to the weakest level in seven months. The People's Bank of China and the foreign-exchange regulator have asked exporters, importers and banks about money flows and hedging demand, while seeking views on the yuan and trading sentiment, said the people who asked not to be identified discussing private information.