US 10-Year Yield Falls Further

The yield on the 10-year US Treasury note fell below 4.1% on Thursday as growth concerns and evidence of a deteriorating labor market raised bets of two more rate cuts by the Fed this year.

Members of US Congress extended the ongoing impasse to prolong the government shutdown, risking a halt in economic activity and public job cuts.

The shutdown also risks the release of the BLS jobs report tomorrow, magnifying the pessimism from recent private labor data that lowered the 10-year yield this week.

Payrolls tracked by the ADP fell for two straight months for the first time since the Covid shock in Q2 2020.

Also, the JOLTS showed a sharp decline in voluntary quits and the Challenger report pointed to slower hiring.

The data consolidated the view of a significant slowdown in the US labor market, which drove the FOMC to restart its cutting cycle last month.

Rate futures show that markets priced two more rate cuts this year by the Fed, despite evidence of stubborn inflation.