Key facts
- The 10-year Treasury yield fell from Thursday's high of 5.34% to a low of 5.17% on Friday.
- Nonfarm payroll employment increased by 29,000 in September, below the 90,000 estimate.
- The unemployment rate was reported at 4.2 percent in September.
- Fed Vice Chair Jefferson and New York Fed's John Williams signaled against rushing to raise interest rates.
- Dallas Fed's Lorie Logan suggested a 0.50% rate hike to reverse previous insurance cuts.
The US 10-year Treasury yield experienced significant volatility on Friday, reacting to a weaker-than-expected jobs report and dovish commentary from Federal Reserve officials. Despite these factors, the yield struggled to maintain its lower levels throughout the trading session.
The Bureau of Labor Statistics reported that nonfarm payroll employment saw little change in September, with an increase of 29,000 jobs, falling short of the 90,000 estimate. The report also noted negative revisions to previous job creation figures. The three-month average job creation stands at 51,000, below the author's breakeven of 78,000 but above the Fed's breakeven. The unemployment rate remained steady at 4.2 percent, with the author attributing the low rate partly to a collapse in population growth.
Several Federal Reserve voting members made comments this week that suggested a cautious approach to further rate hikes. Fed Vice Chair Jefferson and New York Fed's John Williams both indicated that officials should not be in a hurry to raise interest rates. Lorie Logan of the Dallas Fed suggested a potential 0.50% rate hike to reverse previous 'insurance cuts,' a move the author interprets as a signal to markets concerned about rising yields.