US Treasury yields declined on Thursday as investors recalibrated their expectations for Federal Reserve policy following a disappointing jobs report.
The labor market data revealed a contraction of 23,000 jobs in July, a stark reversal from the consensus forecast of 80,000 new positions.
Probabilities of a rate increase at the September FOMC meeting dropped to 44%, down from 55% prior to the release.
This unexpected weakness has significantly altered the trajectory of rate expectations for the coming months.
The market reaction was immediate and pronounced.
Probabilities of a rate increase at the September FOMC meeting dropped to 44%, down from 55% prior to the release.
The shift underscores growing investor confidence that the Federal Reserve is unlikely to tighten policy further in the near term, given the cooling labor market conditions.