U.S. Treasury yields edged lower on Thursday, with Wall Street holding its breath ahead of August’s pivotal nonfarm payrolls report.
The 10-year Treasury yield dropped almost 4 basis points, settling at 3.731%, while the 2-year yield slipped by 2 basis points to 3.75%.
A minor move, but it’s setting the stage for what could be a crucial moment for the markets.
Yields and bond prices move in opposite directions, and just one basis point can shift sentiment—0.01% might sound small, but in this market, it’s meaningful.
Thursday’s ADP report showed private payrolls rising by only 99,000 in August—the smallest gain since early 2021 and well below the 140,000 forecast by economists polled by Dow Jones.
This underwhelming number raised concerns about the health of the U.S. economy, as traders gear up for Friday’s big data release: nonfarm payrolls, unemployment, and wages.
July’s weaker-than-expected jobs data triggered a wave of recession fears, sparking market volatility and renewed debate over whether the Fed should have acted sooner to cut rates.
Investors are now closely watching the Federal Reserve’s next move. A rate cut is expected later this month, but the size of the reduction remains uncertain.
Adding to the mix, weekly jobless claims fell from the previous week, providing a contrast to the weaker ADP report.
Still, the business community remains cautious as uncertainty hangs over the broader economic picture.
On Wednesday, the 10- and 2-year Treasury yields briefly returned to normal after months of inversion—a common recession indicator.
The 10-year yield moved above the 2-year for the first time since June 2022.
On Thursday, the yields remained close together, keeping investors on edge.
As Wall Street waits for Friday’s data, one thing is clear: the markets are watching the Fed closely, with every move potentially shaping the next chapter in the U.S. economy.
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