FX.co ★ US 10-Year Yield Pulls Back

The yield on the 10-year US Treasury note decreased to 4.05% on Wednesday, easing from the previous week's rebound. This movement was driven by growing evidence of a softer domestic labor market, which reinforced the outlook for reduced interest rates. Recent ADP data revealed an unexpected decline of 32,000 in private payrolls for November, marking the third decrease in the last four months and indicating the lowest hiring level since 2023. This data supports calls from influential members of the Federal Open Market Committee (FOMC) for a rate cut, leading markets to strengthen expectations of a final 25 basis points decrease in Federal Reserve interest rates in their end-of-year decision. Speculation that White House economic adviser Kevin Hassett could be appointed as the next Fed chair further contributed to a dovish outlook. Additionally, as December began, it signified the conclusion of the Fed's quantitative tightening program. However, primary dealers indicated their anticipation that the Fed might expand short-term bill purchases to mitigate any potential funding market stress.