10-Year US Treasury Yield Falls to 4% amidst Govt. Shutdown
Amidst government shutdown, the yield on the 10-year US Treasury note fell below 4% on Thursday as growth concerns and evidence of a deteriorating labor market raised bets of two more rate cuts.
Yields slumped across tenors amidst US political deadlock as markets anticipate an economic shock could be felt in a matter of days.
Meanwhile, the U.S government is expected to produce its monthly jobs report on Friday, which may or may not be delivered.
US shutdown after the Republican-controlled Senate failed to reach an agreement on a temporary spending bill late Tuesday, blocking a Democratic effort to extend health care tax credits.
This week, US President Donald Trump threatened permanent layoffs during the shutdown, adding a new risk to this stoppage.
Analysts expressed view that members of US Congress decision to extend the ongoing impasse risk a halt in economic activity and public job cuts.
The shutdown also risks the release of the jobs report, magnifying the pessimism from recent private labor data that lowered the 10-year yield this week.
Payrolls tracked by the ADP fell for two straight months for the first time since the Covid shock in Q2 2020. Also, the JOLTS showed a sharp decline in voluntary quits, and the Challenger report pointed to slower hiring.
The data consolidated the view of a significant slowdown in the US labor market, which drove the Federal Open Market Committee to restart its cutting cycle last month.
Rate futures show that markets priced two more rate cuts this year by the Fed, despite evidence of stubborn inflation. Lafarge Africa Delivers 80% Return on Investment in 9-Month
