The yield on the US 10-year Treasury note fell 7 basis points to 5.175% on Friday, extending its pullback from this week’s high above 5.34%—the highest level since 2002. The decline followed a significantly weaker‑than‑expected US employment report, which lowered expectations that the Federal Reserve would raise interest rates at its October meeting.
Nonfarm payrolls rose by just 29,000 in September, undershooting all forecasts, while employment data for the prior two months were revised down. The unemployment rate ticked up to 4.2%, adding to evidence of a cooling labour market and more cautious hiring in the face of elevated costs.
In response, money markets scaled back the implied probability of an October Fed rate hike, putting additional downward pressure on Treasury yields. A further drag on yields came from declining oil prices, with Brent crude slipping below $100 per barrel and easing fears of a renewed bout of energy‑driven inflation, reinforcing the disinflationary backdrop.
