10-year Treasury yield falls to 5.18% after soft September jobs
The 10-year yield dropped nearly 6 basis points to 5.18% after payrolls rose just 29,000. Markets now see about an 84% chance the Fed holds rates in October.
The benchmark 10-year Treasury yield fell nearly 6 basis points to 5.18% on Friday after the Labor Department reported only 29,000 new jobs in September. CNBC and Quartz, citing the same tape, put the 2-year yield at 4.73% and the 30-year at 5.57%, down about 6 and 3 basis points. Yields and prices move in opposite directions, so the bond market rally was the day’s clear rates story after a weak labor print.
The Bureau of Labor Statistics said unemployment rose to 4.2% from 4.1%, and average hourly earnings rose just 0.1% to $37.81, or 3.0% over the year. July and August were revised down by a combined 60,000 jobs. That package of soft hiring and soft wages cut odds of a Federal Reserve rate increase at the late-October meeting. CME FedWatch showed roughly an 84% chance of a hold. Goldman Sachs Asset Management’s Lindsay Rosner told CNBC the soft print argues against a labor retightening and left one December follow-up hike as her base case.
Backstory: Thursday’s selloff had pushed the 10-year as high as about 5.34%, the highest since 2002, after sticky inflation worries and Iran energy risk. Wednesday’s softer August core PCE at 3.0% year over year had already cooled some hike talk; Friday’s jobs miss extended that move. European 10-year yields also eased about 3 basis points after a rough week for global bonds.
Engage: CNBC and Quartz for same-day yield levels; the BLS Employment Situation tables for the labor facts behind the move; CME FedWatch for October and December pricing. The next major U.S. labor print is the October Employment Situation on Friday, November 6.
Where outlets agree CNBC, Quartz/Yahoo Finance, and BLS agree September payrolls rose 29,000 with unemployment at 4.2%, and that the 10-year yield fell nearly 6 basis points to about 5.18% as October Fed hike odds collapsed.
Where they differ Desks agree an October hike is largely off the table, but they still split on whether sticky energy prices keep a December hike alive.