FX.co ★ Treasury Yields Fall After Weak Labour Data

On Thursday, the yield on the U.S. 10-year Treasury note declined by 4 basis points to 4.24%, marking its lowest point in approximately a week. This decline was driven by renewed concerns regarding the labor market's health, which affected investor sentiment. The labor market jitters were fueled by the Challenger report, revealing that U.S. companies announced 108.4K job cuts last month—the highest January total since 2009. Furthermore, initial jobless claims increased to 231K, exceeding the anticipated 212K and marking the highest level in two months. Adding to this cautious atmosphere, the ADP report indicated that private-sector job growth significantly lagged behind expectations. This sequence of softer labor data has bolstered predictions of Federal Reserve rate cuts, with markets continuing to anticipate an initial reduction in June, with a second possible in September. Concurrently, the U.S. Treasury has maintained its issuance guidance for upcoming quarters, preferring to allocate a larger portion of borrowing to short-term bills rather than long-term bonds, in an effort to manage borrowing costs in the context of elevated interest rates.