Weak US nonfarm payrolls pushed Treasury prices higher and reduced Fed rate-hike
expectations. The 2yr Treasury yield fell 6bps to 4.11% and the 10yr fell 2bps
to 4.46%. Interest-rate swaps price the odds of a hike at the Fed meeting later
this month at about 20%, down from roughly 33% before the data. Markets now
expect fewer than two hikes by Mar 2027, each no larger than 25bps. Nonfarm
payrolls rose 57,000 last month (prior two months revised lower);
Bloomberg-surveyed economists had forecast a 113,000 gain. Labor force
participation dropped materially, pushing the unemployment rate down to 4.2%.
