United States Treasury yields have climbed to their highest levels in 24 years, underlining how dramatically the bond market has re-priced the outlook for interest rates. The 10-year yield touched 5.34 per cent on October 1, the first trading day of the month, capping the steepest quarterly rise in bond yields in 32 years.
The rout did tempt some buyers back at those levels, with yields between 5.25 and 5.35 per cent proving attractive to long-term value investors, and the benchmark was trading at 5.2470 per cent in Asia on Friday. Still, the trend since late August has pointed in only one direction — up — and the last two-day rebound in bonds came a month ago before quickly fizzling.
Markets were awaiting the September nonfarm payrolls report for fresh direction, with forecasts pointing to a gain of 90,000 jobs, though estimates ranged widely from 35,000 to 180,000. After a soft jobs print showed just 29,000 additions and unemployment ticking up to 4.2 per cent, traders slashed bets on a rate hike at the Federal Reserve's October 27-28 meeting to below one-in-five. Yet the expectation remains that the next move is up: a second rate increase by the end of the year is still seen as likely, with December priced at close to 90 per cent probability, and two top Fed officials said this week they wanted to see more data before deciding.
The bond selloff spilled across the Atlantic. France's budget failed to calm investors about the country's fiscal path, blowing the French-German yield spread past 140 basis points — the widest since 2012 — and triggering a dump of the euro. The single currency slid 1.3 per cent against the Swiss franc, its worst day since April 2025, unwinding a crowded carry trade.
Meanwhile, the dollar hovered near a 17-month high, set for a third weekly gain of about 1.1 per cent, and Brent crude held around $102 a barrel as the US was reportedly sending more troops and another aircraft carrier to the Middle East, while China suspended oil product exports, raising fears of worsening global diesel and jet fuel shortages.
Sources: Can Treasuries rally for a second day? — Reuters · Fed seen skipping October rate hike as job market cools — Reuters
The rout did tempt some buyers back at those levels, with yields between 5.25 and 5.35 per cent proving attractive to long-term value investors, and the benchmark was trading at 5.2470 per cent in Asia on Friday. Still, the trend since late August has pointed in only one direction — up — and the last two-day rebound in bonds came a month ago before quickly fizzling.
Markets were awaiting the September nonfarm payrolls report for fresh direction, with forecasts pointing to a gain of 90,000 jobs, though estimates ranged widely from 35,000 to 180,000. After a soft jobs print showed just 29,000 additions and unemployment ticking up to 4.2 per cent, traders slashed bets on a rate hike at the Federal Reserve's October 27-28 meeting to below one-in-five. Yet the expectation remains that the next move is up: a second rate increase by the end of the year is still seen as likely, with December priced at close to 90 per cent probability, and two top Fed officials said this week they wanted to see more data before deciding.
The bond selloff spilled across the Atlantic. France's budget failed to calm investors about the country's fiscal path, blowing the French-German yield spread past 140 basis points — the widest since 2012 — and triggering a dump of the euro. The single currency slid 1.3 per cent against the Swiss franc, its worst day since April 2025, unwinding a crowded carry trade.
Meanwhile, the dollar hovered near a 17-month high, set for a third weekly gain of about 1.1 per cent, and Brent crude held around $102 a barrel as the US was reportedly sending more troops and another aircraft carrier to the Middle East, while China suspended oil product exports, raising fears of worsening global diesel and jet fuel shortages.
Sources: Can Treasuries rally for a second day? — Reuters · Fed seen skipping October rate hike as job market cools — Reuters
