FX.co ★ US 10-Year Yield Holds Weekly Decline

The yield on the 10-year U.S. Treasury note remained steady at 4.1% on Friday, slipping by 7 basis points over the week due to concerns about economic growth and indications of a weakening labor market. U.S. policymakers continued to face a deadlock over extending the government shutdown, diminishing public economic activity and posing a risk of job losses. Additionally, the shutdown resulted in the postponement of the September BLS jobs report, compelling the markets to rely on a slew of negative private economic reports. According to the ISM PMI, the U.S. services sector unexpectedly stalled, and the labor component of the survey showed further contraction. This aligns with successive declines in the ADP payrolls survey, a drop in voluntary quits as reported by JOLTS, and slower hiring noted in the Challenger report. Collectively, these indicators suggest a marked deceleration in the U.S. labor market, prompting the Federal Open Market Committee (FOMC) to restart its rate-cutting cycle last month. Despite persistent inflationary pressures, futures markets have already priced in two additional rate cuts by the Federal Reserve for this year.