FX.co ★ Treasury Yields Resume Their Rise

The yield on the US 10-year Treasury note rebounded to 5.52% on Friday after having fallen as much as 8 bps earlier in the session, as a weaker-than-expected jobs report gave only brief support to the bond market. Nonfarm payrolls rose by just 29K last month, far below the 90K increase anticipated by economists, and employment figures for the prior two months were also revised lower. Following the data, expectations for further Federal Reserve tightening eased, with markets no longer pricing in a rate hike at this month’s meeting, though traders still see a strong probability of an increase in December.

At the same time, a pullback in oil prices offered some relief on the inflation front, even as the conflict in the Middle East remains unresolved. Earlier this week, the benchmark 10-year yield had climbed above 5.34%, its highest level since 2002, driven by expectations of additional Fed tightening, ongoing geopolitical uncertainty, concerns over the US fiscal and debt outlook, and generally resilient economic data.