FX.co ★ Soft Labor, Services Data Drive Treasury Yields Lower

The yield on the US 10-year Treasury note decreased by roughly 9 basis points, dipping below 4.4% on Wednesday, marking its lowest point in nearly a month. This decline comes in response to a series of weak economic indicators that have heightened concerns about the US economy's health and increased expectations for several Federal Reserve rate cuts this year. Specifically, the ISM Services PMI unexpectedly fell into contraction in May, the first such decline in nearly a year, while inflation pressures reached their highest point since 2022. Additionally, the ADP report revealed that the private sector added only 37,000 jobs, marking the smallest monthly gain in almost two years and falling well short of predictions. Following the ADP data release, President Trump reiterated his calls for the Federal Reserve to relax its monetary policy. However, Federal Reserve officials have maintained a cautious approach due to persistent uncertainties regarding trade dynamics and global economic conditions. Financial markets are now anticipating two rate cuts by the Federal Reserve in 2025, with the first reduction most likely expected in October.