FX.co ★ US 10-Year Yield Swings Sharply Lower

The yield on the 10-year U.S. Treasury note decreased to 4.2% on Wednesday, falling 10 basis points below the session highs, and revisiting its lowest point in a month. This decline was precipitated by discouraging economic data, prompting a resurgence of lower interest rates from the Federal Reserve into market discussions. The Job Openings and Labor Turnover Survey (JOLTS) report showed that job openings fell significantly more than anticipated, reaching their lowest level in 10 months in July, which highlighted the ongoing downturn in the labor market during this period. Moreover, factory orders experienced a sharp contraction for the second consecutive month. The market has fully factored in the possibility of a rate cut by the Federal Reserve in its upcoming decision this month, yet remains divided on whether there will be two or three rate cuts throughout the year. Nonetheless, the yield on the 30-year bond experienced a more moderate decline, thereby steepening the U.S. yield curve. This pattern reflects prevailing concerns about unsustainable fiscal expansion and persistent high inflation.