10-year US Treasury yields hit 5-week lows as jobs gains disappoint
economictimes.indiatimes.comTreasury yields fell to five-week lows on Friday and two-year yields were the lowest since early September after data showed that U.S. job growth slowed more than expected in October.
Nonfarm payrolls increased by 150,000 jobs last month, below economists expectations for 180,000 job gains.
Data for September was revised lower to show 297,000 jobs created instead of 336,000 as previously reported.
Some of the drop in job gains relative to expectations was likely due in part as strikes by the United Auto Workers (UAW) union against Detroit's «Big Three» car makers.
Average hourly earnings rose by 0.2% in the month, below expectations for a 0.3% increase. On an annual basis they rose 4.1%, above consensus estimates for a 4.0% gain.
“I think markets are pretty confident now that the Fed really is at the terminal rate… that is the kind of the final nail in the coffin in terms of market pricing," said Will Compernolle, macro strategist at FHN Financial in New York.
Traders are now pricing only a 10% chance of a Federal Reserve rate hike in December, down from 20% on Thursday, and the odds of a January increase have slipped to 15%, from 28%, according to the CME Group's FedWatch Tool.
«I wouldn’t say that this one data report really says that the economy is slowing going into the fourth quarter, I think there is still a lot of hard economic data that says the economy’s strong,» Compernolle added.
«But this is certainly the labor market softening that I think the Fed has been expecting for a while.»
Benchmark 10-year yields fell as low as 4.527%, the lowest since Sept. 29.
Two-year note yields reached 4.847%, the lowest since Sept. 1.
The inversion in the two-year, 10-year yield curve deepened as far as minus 40 basis
