Ten-Year Yield Drops To Four-Month Low On Weaker Than Expected Jobs Data

(RTTNews) - Treasuries moved higher over the course of the trading day on Thursday, extending the strong upward move seen in the previous session.

Bond prices gave back ground after an early advance but moved back to the upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.5 basis points to 4.176 percent.

The ten-year yield added to the 6.6 basis point slump seen during Wednesday's session, falling to its lowest closing level in four months.

The continued strength among treasuries came as some weaker than expected U.S. jobs data increased confidence the Federal Reserve will lower interest rates later this month.

A report released by payroll processor ADP showed private sector employment in the U.S. increased by less than expected in the month of August.

ADP said private sector employment rose by 54,000 jobs in August after jumping by an upwardly revised 106,000 jobs in July.

Economists had expected private sector employment to rise by 65,000 jobs compared to the addition of 104,000 jobs originally reported for the previous month.

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended August 30th.

The report said initial jobless claims climbed to 237,000, an increase of 8,000 from the previous week's unrevised level of 229,000. Economists had expected jobless claims to inch up to 230,000.

With the bigger than expected increase, jobless claims reached their highest level since hitting a matching figure in the week ended June 21st.

"We continue to see softness growing in the labor market as tariff policy uncertainty lingers, immigration changes take effect, and AI adoption grows," said Eric Teal, Chief Investment Officer for Comerica Wealth Management.

He added, "The silver-lining is the weaker the jobs data the more cover there is for stimulative interest rate cuts that are on the horizon."

CME Group's FedWatch Tool is currently indicating a 97.4 percent chance the Fed will lower interest rates by 25 basis points at its September 16-17 meeting.

On Friday, the Labor Department is scheduled to release its more closely watched report on the employment situation in the month of August.

Economists currently expect employment to increase by 75,000 jobs in August after rising by 73,000 jobs in July, while the unemployment rate is expected to inch up to 4.3 percent from 4.2 percent.

Trading on Friday is likely to be driven by reaction to the monthly jobs report and its impact on the outlook for interest rates.