U.S. Treasury Prices Rise as Weak Jobs Data Lowers Rate-Hike Expectations

U.S. Treasury prices rose after a weaker-than-expected nonfarm payrolls report prompted traders to scale back expectations for Federal Reserve rate hikes in the coming months. According to Jin10, the two-year U.S. Treasury yield, which is most sensitive to monetary policy shifts, fell 6 basis points to 4.11%, while the 10-year yield slipped 2 basis points to 4.46%. Interest-rate swap data showed markets put the probability of a Fed rate hike at a meeting later this month at about 20%, down from 33% before the data was released. Markets also priced in fewer than two rate hikes by March 2027, with each increase no larger than 25 basis points. Nonfarm payrolls rose by 57,000 last month, and the prior two months’ figures were revised lower. Economists surveyed by Bloomberg had previously expected an increase of 113,000. The unemployment rate fell to 4.2% as the labor force participation rate dropped sharply.