US bond yields fall as investors bet Fed will hold rates in October after weak jobs data

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US government bond yields fell today after the release of weak employment figures, which would support the Federal Reserve in holding interest rates steady at this month's monetary policy meeting. The yield on the 30-year US Treasury note dropped to 5.570% after earlier surging to its highest level since 2002. The yield on the 10-year US Treasury note, the main benchmark for setting interest rates on mortgages, auto loans and credit card debt, fell to 5.180% after climbing this week to its highest level since 2002. The 2-year yield, which often moves in line with the Fed's policy rate decisions, fell to 4.730%. Investors sharply increased their bets that the Fed will hold rates at its October meeting following the weak jobs data, having previously expected a rate hike this month. The latest CME Group FedWatch Tool shows investors pricing an 83.9% probability that the Fed will keep rates at 3.75-4.00% at the October meeting, up from just 35.8% a week ago, and a 16.1% probability that the Fed will raise rates by 0.25% to 4.00-4.25%, down from as much as 64.2% a week ago. The US Labor Department reported that nonfarm payrolls rose by only 29,000 in September, below analysts' forecast of 89,000. The unemployment rate rose to 4.2%, while analysts had expected it to hold steady at 4.1%. The Labor Department also revised August payrolls to an increase of 133,000 from a previously reported gain of 162,000. Private-sector employment rose by 46,000 in September, while government employment fell by 17,000. Average hourly earnings rose 3.0% in September from a year earlier, below analysts' forecast of 3.2%, and edged up 0.1% from the previous month, below the expected 0.3%. The US labor force participation rate, which shows the share of the population in the workforce, stood at 61.8%.

Impact on assets 4

Others▼ · 4 stocks
％Effective Federal Funds Rate
EFFR
▼ NegativeMonetaryrelevance

Weak jobs data sharply raised bets the Fed will hold rates at the October meeting, lowering the expected policy rate path.

％US Government Bond 2Y
US-2Y
▼ NegativeMonetaryrelevance

2-year yield, which tracks Fed policy expectations, fell to 4.730% on increased odds of a rate hold.

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