The yield on the US 10-year Treasury note dropped sharply by 7 basis points to 4.6% on Friday after a weaker-than-expected employment report reduced expectations for further Federal Reserve rate hikes. Nonfarm payrolls unexpectedly fell by 23,000 in the latest month, while previously reported gains for May and June were revised down by a combined 103,000. At the same time, the unemployment rate edged down to 4.1% from 4.2%, indicating renewed strains in the labor market after a period of surprising resilience earlier this year. Market pricing now implies a 42% probability of a Fed rate increase in September, down from 58% the previous day, and expectations for cumulative rate hikes by December have eased to 28 basis points from 32 basis points. On Thursday, the Financial Times reported that Fed Chair Warsh is expected to maintain the central bank’s cautious messaging despite recent market pushback. However, according to the FT, he remains prepared to raise rates in September if upcoming inflation data come in stronger than anticipated.