U.S. Treasury yields fell after a delayed September jobs report showed nonfarm payrolls rose 119,000 versus a Dow Jones consensus of 50,000 and August was revised to a 4,000-job loss; the 10-year yield dropped 3 bps to 4.098% and the 2-year fell about 4 bps to 3.552%. The unemployment rate climbed to 4.4%, the highest since October 2021, producing a mixed signal that has pushed traders to lift the odds of a December 25 bp Fed cut to roughly 42% (from about 30% Wednesday), though that probability has swung substantially in recent weeks. Fed minutes showing officials split over whether slowing jobs or inflation pose the bigger risk — and several members urging no further cuts this year — leave the policy outlook ambivalent and make the new payrolls mix a key input for December decision-making.
The September payroll report showed nonfarm payrolls rose 119,000 versus a Dow Jones consensus of 50,000, while August was revised to a 4,000-job loss and July revised down to 72,000 (a 7,000 cut), and the unemployment rate increased to 4.4%, the highest since October 2021. U.S. Treasury yields moved lower on the release: the 10-year fell 3 basis points to 4.098%, the 2-year dropped 4 basis points to 3.552%, and the 30-year was reported at 3.552% more than 2 basis points lower. Market pricing adjusted materially after the print: CME FedWatch-implied odds of a December 25 bp cut rose to ~42% from 30% on Wednesday, though odds have swung from 50% a week ago and ~99% a month ago. Federal Reserve minutes showed internal division over inflation versus a slowing labor market, and Deutsche Bank noted a December cut likely hinges on a weaker payroll print, leaving the policy path ambiguous and markets sensitive to incoming economic data.
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