US government bond yields fall after jobs data

According to Tradeweb, the yield on the 10-year note was trading at 1.467% recently, up from 1.524% at Thursday’s close. The 30-year Treasury yield declined to 1.896% from 1.963% recently.

Yields, which fall when bond prices rise, declined after data showed employers added a seasonally adjusted 531,000 jobs in October. This beats economists’ estimate of 450,000 jobs polled by the Wall Street Journal. The US unemployment rate fell to 4.6% in October, beating economists’ expectations.

The move extended a volatile week that reassured investors about inflation and interest rates. After the Federal Reserve announced plans to end its pandemic bond-buying program by June, some bet that persistent inflation could force Federal Reserve officials to raise interest rates several times in 2022. The yield on the two-year Treasury note, which tends to rise and fall on expectations of a rate hike, recently rose above 0.5% to its highest level since March 2020.

The two-year yield posted its biggest one-session drop since early last year after the Bank of England kept interest rates stable on Thursday. The move stunned some traders, who saw short-term government bond yields around the world set higher after sharp signals from Canada to Australia’s central banks.

Returns on UK government one-year bonds nearly halved within hours of the BoE’s announcement, their biggest daily move since the 2009 financial crisis.

Donald Ellenberger, senior portfolio manager at Federated Hermes, said: “The rally we’re seeing in the Treasury market is similar to what we’re seeing in Europe.”

At the same time, many began lowering their long-term expectations for the US economy, betting that higher-than-expected inflation and interest rate hikes would cool growth, dragging the 10-year yield- That falls as investors expect slower long-term growth — well below the annual high that hit nearly 1.7% last month.

Some analysts and investors said Friday’s jobs report was an encouraging sign for the economy. Fed Chairman Jerome Powell said earlier in the week that labor-market conditions could improve by the second half of next year, in line with the Fed’s target of maximum employment, which would justify higher interest rates.

“It’s a dangerous game, because if unemployment hits inflation before it reaches its target, [the Fed is] Gotta slam on the brakes hard,” Ellenberger said.