Treasury Yields Fall Before U.S. Jobs Report

The move matters because it tightens financial conditions only modestly, but it also reflects a market that is still wrestling with the path of growth, inflation and Federal Reserve policy. Shorter- and intermediate-dated yields also eased, with the two-year yield slipping to 4.51%, as traders positioned for a labor market reading that could either reinforce the case for higher-for-longer rates or give bonds room to extend their rally.

Thursday’s claims data offered little help to the hawkish camp. Initial jobless claims fell unexpectedly to 189,000 in the week ended Oct. 31, matching a multi-decade low and coming in below economists’ expectations for 196,000, a sign the labor market remains resilient despite higher borrowing costs.

For investors, the immediate question is whether Friday’s payrolls report confirms that resilience or starts to show a cooler economy. Economists expect the U.S. to add 62,000 jobs in October, up from 29,000 in September, with unemployment seen steady at 4.2%.

The bond rally also came as technology shares led Wall Street lower on concerns about the durability of the AI boom, with some traders fretting that the new Democratic control of Congress could bring tighter regulation. For now, that combination is helping duration assets and pressuring equity-heavy portfolios as the market recalibrates into a key macro test.