FX.co ★ US Yields Rise on Shutdown Worries

On Thursday, the yield on the 10-year US Treasury note nudged up to 4.13%, as the delay in crucial economic data release due to the US government shutdown introduced new uncertainties surrounding Treasury securities. This development fuels apprehensions that the ongoing political deadlock might hinder economic growth. Additionally, the shutdown has cast doubt on the release of tomorrow’s Bureau of Labor Statistics (BLS) jobs report, intensifying the negative sentiment from recent private labor statistics that kept the 10-year yield suppressed throughout the week. ADP-tracked payrolls have decreased for two consecutive months, marking the first such decline since the COVID-19 impact in the second quarter of 2020. Concurrently, the JOLTS report highlighted a notable drop in voluntary job quits, while the Challenger report indicated a slowdown in hiring activities. These data points reinforce the perception of a substantial deceleration in the US labor market, prompting the Federal Open Market Committee (FOMC) to resume its rate-cutting strategy last month. Despite persistent inflation concerns, futures markets are anticipating two additional rate cuts by the Federal Reserve this year.