(Bloomberg) -- Treasury yields resumed their downward slide — with the benchmark 10-year note’s falling to the lowest level since Sept. 1 — after the latest sign of labor-market cooling bolstered bets that a Federal Reserve shift to policy easing isn’t far off.
Long-term yields led the decline, falling as much as 11 basis points. The 10-year’s reached 4.16%. Two-year yields, more closely tied to the outlook for Fed policy, fell as much as 8 basis points after reaching the lowest level since June last week.
“The labor market is unmistakably cooling after running red hot for the last few years,” Bill Adams, chief economist at Comerica Bank, said in a note. “That sent yields lower as markets price in increased confidence that the Fed will pivot to rate cuts in 2024.”
The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey showed that US job openings slumped in October to the lowest level since March 2021. With Fed officials in a self-imposed quiet period of next week’s policy decision and the critical November employment report ahead Friday, labor-market data are top-of-mind for traders.
Swaps contracts that anticipate the outcome of Fed meetings slightly increased the degree of easing they foresee by the end of 2024, with the effective fed funds rate anticipated to fall to about 4.05% from 5.33% currently. The contracts also imply about a 60% chance of a rate cut in March.
Read more: US Job Openings Fall to Lowest Since 2021 as Labor Market Cools
The job openings data “provides support to doves for signs of some cooling in labor market tightness,” said Neil Dutta, economist at Renaissance Macro Research.
(Updates rates throughout, adds analyst’s comment in final paragraph.)
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