September 7, 2018 / 1:13 PM / 2 months ago

TREASURIES-Yields rise as data shows higher wage pressures

* 10-year yields highest since Aug. 10

* Annual wage growth largest since 2009

* Traders raise odds of December rate hike

By Karen Brettell

NEW YORK, Sept 7 (Reuters) - U.S. benchmark Treasury yields rose on Friday to their highest levels in almost a month after data showed that U.S. job growth accelerated in August, while the annual increase in wages was the largest since June 2009.

Nonfarm payrolls surged by 201,000 jobs last month, boosted by hiring at construction sites, wholesalers and professional and business services, the Labor Department said on Friday.

Average hourly earnings increased 0.4 percent, or 10 cents in August after rising 0.3 percent in July. That raised the annual increase in wages to 2.9 percent in August, from 2.7 percent in July.

“The key to watch is the wages because we’re already at quite a low employment rate and we’ve already had many, many months in a row of job adds,” said Lou Brien, a market strategist at DRW Trading in Chicago.

“If it does this again next month, and the month after that, then it will have consequences for the Fed, they will most certainly not take any time off if you get wages moving up in a significant way,” Brien added.

Benchmark 10-year notes fell 12/32 in price to yield 2.925 percent, up from 2.877 percent on Thursday.

Interest rate futures traders are fully pricing in a rate increase at this month’s Federal Reserve meeting, putting it at a 99 percent probability, according to the CME Group’s FedWatch Tool.

The odds of an additional hike in December, which would be the fourth this year, rose to 72 percent, from 67 percent before the data. (Editing by Chizu Nomiyama) )

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