US 10-Year Treasury Yield Slips Toward 4% on Another Round of Soft Labor Data

US Treasury yields drifted lower on Tuesday, with the 10-year note slipping toward the 4% mark, after fresh data highlighted continued softening in the labor market and comments from Federal Reserve Governor Stephen Miran reinforced expectations for a rate cut next month.

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Miran repeated his view that the US economy requires significant interest-rate reductions to regain balance. Adding to the policy discussion, Treasury Secretary Scott Bessent noted that the recent government shutdown shaved roughly 1.5% off economic growth, underscoring the toll that political gridlock has taken on activity.

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Bond markets also found support from a steep drop in oil prices, triggered by renewed optimism around a potential peace deal in Ukraine. At the same time, a strong rally in UK government bonds and expectations of increased month-end buying of Treasuries helped fuel the move lower in yields. Traders who might otherwise have built up short positions were reluctant to do so ahead of this expected demand, creating a more favorable backdrop for a bond rally.

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Across the Treasury curve, yield movements were mixed. Longer-dated maturities led the decline, while shorter-term yields lagged ahead of a major auction of five-year notes scheduled for 1 p.m. in New York.

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The $70 billion sale the largest among the government’s seven recurring fixed-rate auctions follows Monday’s two-year note auction, which drew strong interest from buyers.

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The market continues to grapple with the lingering effects of the six-week US government shutdown, which ended Nov. 12 and has delayed the release of key economic data. With official indicators arriving slowly, traders have turned to alternative sources, including ADP Research’s private payrolls data, to gauge the economy’s momentum. For the four-week period ending Nov. 8, ADP reported an average decline of 13,500 private-sector jobs, reinforcing the view that the labor market is losing steam.

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Market-based pricing for the Fed’s December 10 meeting remained steady, with futures implying roughly 20 basis points of easing close to an 80% probability of a quarter-point rate cut. Many investors see the softening labor picture as enough justification for policymakers to move ahead with another reduction.

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“The labor market is definitely cooling, and getting ahead of that slowdown makes some sense,” said Krishna Memani, chief investment officer at Lafayette College, speaking on Television.

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Still, he pointed out that lingering inflation pressures which some Fed officials argue are reason to pause in December are likely to limit how far 10-year yields can fall, even in a weakening growth environment.

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After weeks of delays, the Census Bureau and Bureau of Labor Statistics finally released retail-sales and producer-price figures for September. Both reports arrived broadly in line with economists’ expectations and generated little reaction in financial markets. With many investors already relying on forward-looking indicators and market-based signals, the delayed numbers served more as confirmation than as new catalysts.

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As traders look ahead to the final Fed meeting of the year, the interplay between a cooling labor market, sticky inflation, policy commentary, and delayed data releases continues to shape interest-rate expectations. For now, the bond market appears comfortable leaning toward another rate cut, even as some policymakers maintain a cautious tone.

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