04.09.202514:18:24UTC+00US 10-Year Yield Holds Pullback

On Thursday, the yield on the 10-year US Treasury note dropped below 4.2%, reaching near four-month lows, as indicators suggest a weakening labor market, bolstering predictions for lower interest rates. According to data from ADP, only 54,000 jobs were added in August, falling significantly short of recent averages and the market's expectation of a 65,000 increase. This follows job cuts that exceeded consensus, as reported by Challenger, and a reduction in openings indicated by the JOLTS report. In response, rate traders have fully anticipated a 25 basis point reduction by the Federal Reserve this month, with nearly half expecting a total of three rate cuts before year-end. Nonetheless, stronger activity reflected in the ISM Services PMI buoyed long-term yields from their session lows. Despite increasing confidence in a dovish shift by the Federal Reserve, the yield on Treasury bonds remained high, steepening the US yield curve amid concerns over rising inflation and the possibility of the FOMC yielding to political pressures.