FX.co ★ 10-Year Treasury Yield Falls Further

The yield on the 10-year U.S. Treasury note dipped further to 4.2% on Thursday, marking its lowest point in nearly three weeks. This decline was driven by weaker labor data, which bolstered expectations for multiple interest rate cuts by the Federal Reserve this year. The JOLTS report indicated that job openings fell to a five-year low in December, while the Challenger report highlighted the highest number of January job cuts since 2009. Additionally, initial jobless claims exceeded forecasts, reaching a two-month high. These developments, coupled with the ADP report showing private-sector job growth below projections, have fortified the anticipation of several Federal Reserve rate cuts this year. Markets are currently factoring in a potential rate reduction in June, with another possible cut in September. Concurrently, the U.S. Treasury has maintained its issuance strategy for upcoming quarters, opting to increase the proportion of short-term bills relative to longer-term bonds. This decision aims to manage borrowing costs effectively in the context of prevailing high-interest rates.