The 10-year Treasury yield is continuing its decline and is now on the verge of falling below 4% amid rising momentum for a jumbo, or 50 bps, rate cut at the September 16-17 Federal Open Market Committee (FOMC) meeting. The yield stands at 4.061% at the time of writing, its lowest level since the plunge triggered by President Trump’s ‘Liberation Day’ in early April.
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“Taking away the knee-jerk yields crash seen around the ‘Liberation Day’ de-risking, current U.S. 10-year at sub 4.1% is at lows of the year,” wrote JPMorgan strategist Mislav Matejka in a note on Monday. “We think this is set to continue, partly due to softening labor market data flow.”
Investors Eye Yields After Weak Payrolls Data
Meanwhile, bond prices are on the rise given their inverse relationship to their yields. This comes after Friday’s nonfarm payrolls data added to a growing list of signals that the labor market is showing signs of weakness, influencing Bank of America to lower its year-end 10-Year Treasury yield estimate to 4.0% from 4.25%.
Investors are now weighing the potential for slower economic growth, with weaker labor data likely to keep demand for Treasuries and other safe-haven assets elevated. Upcoming inflation reports, like the consumer price index (CPI) on Thursday, will also provide clues on where yields are headed.
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