US 10-Year Yield Holds Near 5-Month Low

The yield on the 10-year US Treasury note hovered around 4% on Tuesday, its lowest in five months, as growing concerns over a cooling labor market reinforced expectations for Federal Reserve rate cuts. Investors awaited benchmark revisions to US employment data covering April 2024 to March 2025, with economists forecasting downward adjustments of up to 800,000 jobs, a sign the Fed may be falling behind in its mandate to maximize employment. Focus also shifted to two key inflation readings this week that could guide the next policy move, with the August producer price index due Wednesday and the consumer price index Thursday. Markets are currently pricing in an 89% probability of a 25 basis point cut at next week’s meeting, while some traders continue to bet on a larger 50 basis point reduction.