Treasury Yields Rebound Following Weak September Jobs Report
Yields reversed an early drop after payrolls missed forecasts, as traders maintained expectations of prolonged high borrowing costs.
U.S. Treasury yields rose on Friday after initially falling following an unexpectedly weak September jobs report, according to reporting by CNBC Business (https://www.cnbc.com/2026/10/02/treasury-yields-bonds-nonfarm-payrolls.html).
The benchmark 10-year Treasury yield climbed nearly 5 basis points to 5.281%, following a move earlier in the week to its highest level since 2002. The 30-year Treasury yield rose 3 basis points to 5.634%, while the policy-sensitive 2-year Treasury yield advanced 4 basis points to 4.831%. One basis point equals 0.01 percentage point, and bond yields move inversely to prices.
Nonfarm payrolls expanded by 29,000 in September while the unemployment rate increased to 4.2% from 4.1%, the Bureau of Labor Statistics reported. Economists surveyed by Dow Jones had projected an increase of 84,000 jobs and an unchanged unemployment rate. The Bureau also revised August job gains downward to 133,000.
Yields dropped immediately after the data release before reversing course through the trading session. Timothy Chubb, chief investment officer at Girard Advisory Services, noted that the report did not fundamentally alter the central bank's trajectory and that the path for rates remains higher for longer.
Traders priced in a 77% probability that the Federal Reserve will maintain interest rates at its October meeting, according to CME Group's FedWatch tool, while continuing to price a high likelihood of a rate increase in December.
Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said a rate hike in October remains unlikely but added that the Fed's hiking cycle has likely not concluded. Rosner noted that while a December hike remains her team's base case, market pressures and higher energy prices could still influence policy timing.
In international sovereign debt markets, pressure eased following sharp sell-offs earlier in the week, with 10-year yields declining by roughly 3 basis points across major European economies as investors assessed broader central bank commentary and persistent inflation trends.
Sources
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