How does the small non-farm affect US Treasuries?
The small non-farm (ADP employment data) is released two days earlier than the large non-farm. It mainly looks at the hiring situation in private enterprises. Good data → indicates a booming economy → the Fed may not cut interest rates or even raise them → bond yields rise, bond prices fall.
Example: In May 2025, the small non-farm exceeded expectations, and JPMorgan directly shouted, 'Hurry up and sell 5-year Treasuries', fearing that interest rates would rise too quickly and lead to losses.
Data falsification issue: In April 2024, the official data for non-farm jobs was cut from 165,000 to 108,000, exposing statistical manipulation. People began to doubt whether employment was really good, leading to hesitance in buying bonds and causing bond prices to fluctuate wildly.
The biggest problem with US Treasuries now.
The US has borrowed too much: US Treasury debt has reached $36 trillion, and just the interest needs to be repaid $1.3 trillion a year (15% of government spending). Recently, no one is eager to buy 20-year Treasuries, interest rates have soared to 5% and they still can't sell, indicating that the market fears the US won't be able to repay its debts.
Credit downgrade + policy mismanagement: Rating agency Moody's downgraded US credit from 'top tier' to 'upper tier', while Trump wants to cut taxes by $3.7 trillion, creating a bigger hole → investors are more hesitant to touch US Treasuries, and interest rates can only continue to rise.
The linkage pattern between small non-farm and US Treasuries.
Bad data: Everyone panics → rushes to buy Treasuries for safety → bond yields fall.
Good data: Everyone sells Treasuries → interest rates rise.
But! Right now the market is more afraid that the US won't pay its debts, so even if the data fluctuates, long-term Treasury yields are still being stubbornly supported at high levels.
Institutional operations: Big players like Goldman Sachs and Bridgewater are secretly exchanging US Treasuries for gold and Swiss francs, creating a vicious cycle of 'interest rates rise → dollar falls → more people sell'.
What should ordinary people do?
Don't make random moves in the short term. The Federal Reserve may stubbornly maintain high interest rates to keep US Treasuries attractive. The market can be volatile before and after non-farm data, be careful of getting cut.
Long-term strategy: Use the 'barbell strategy': half of the money buys short-term Treasuries to enjoy high interest rates, and the other half buys inflation-protected Treasuries to guard against the government printing too much money, leading to price increases.
Keep an eye on these signals.
Data authenticity: Let's see if the Labor Department secretly changes the data again, like the independent report from the Philadelphia Fed.
Treasury auction: If Treasury auctions for bonds over 20 years are consistently cold with bidders at <2.5 times, it indicates something serious is about to happen.
Policy changes: When will the Federal Reserve stop tapering? Will the Treasury issue fewer bonds? Small non-farm data is like weather forecasts, able to sense the Fed's policy direction in advance. But the biggest risk for US Treasuries now is that the US itself is in deep debt, and the quality of the data can only cause short-term fluctuations. Ordinary people should either trade quickly in and out or allocate long-term to avoid risks, don't follow the crowd blindly.
