FX.co ★ US 10-Year Yield Falls on Weak Jobs Data

The yield on the 10-year US Treasury note fell by nearly 5 basis points to 4.08% on Wednesday, driven by indications of weakening labor market conditions that heightened the likelihood of an imminent Federal Reserve interest rate cut. According to ADP's high-frequency data, private employers reduced approximately 11,250 jobs weekly over the four weeks leading up to October 25. This development raised concerns as the protracted government shutdown delayed the crucial monthly jobs report. Markets are now factoring in a roughly 68% probability of a 25 basis point rate reduction in December, an increase from about 62% the previous day. At the end of the month, the Fed is anticipated to pause its balance sheet reduction and enhance Treasury bill acquisitions to compensate for maturing mortgage-backed securities. Concurrently, optimism increased regarding a potential end to the unprecedentedly long shutdown, with the Republican-controlled House set to pass legislation to restore funding to essential departments and agencies.