U.S. Treasury Yields Drop Amid Slow Job Growth in August

NEW YORK, NY – U.S. Treasury yields dropped on Friday after a key jobs report indicated that hiring in August was weaker than many analysts expected. The benchmark yield fell 6 basis points to 4.103%, marking its lowest level since April 7. The yield on the 10-year Treasury note decreased to 3.495%, also a five-month low, while the 30-year yield dipped over 3 basis points to 4.830%.

Analysts had anticipated an increase of 75,000 jobs for the last month, but actual employment growth numbers revealed that only 173,000 jobs were added. The unemployment rate saw a slight rise to 4.3%, aligning with forecasts. This follows a report released Thursday by ADP, showing private payrolls added only 106,000 jobs in August, also falling short of projections.

“The labor market continues to show fatigue as businesses hold back on hiring amid uncertainty around the direction of inflation, tariffs, and the strength of the underlying economy,” said Joe Gaffoglio, president and CEO at Mutual of America Capital Management.

Investor sentiment indicates that this slowing job growth may push the Federal Reserve towards implementing an interest rate cut during its September meeting. Interest rate futures currently reflect a 99% chance of a quarter-point reduction in the existing overnight lending rate of 4.25% to 4.50% at the Fed’s upcoming meeting.

Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley, noted, “So far this week, the data is confirming a slowdown in the labor market. In the short term, markets may embrace that data because it should increase the odds of Fed rate cuts. However, if the numbers deteriorate too much, it could raise concerns about the health of the economy.”

This week, Wall Street faced a downturn as major stock indexes declined. The Dow Jones Industrial Average, S&P 500, and Nasdaq 100 all ended the day lower. Marvell Technology saw a significant drop of over 18% after a lackluster revenue forecast for Q3, while Dell Technologies fell more than 8% due to disappointing AI server orders.

According to the U.S. Department of Commerce, the core PCE price index rose 0.3% month-over-month, alongside a 2.9% increase year-over-year through July, which meets expectations. July personal spending climbed 0.5%, aligned with forecasted figures.

San Francisco Fed President Mary Daly expressed that officials are likely prepared to adjust interest rates soon, stating, “It will soon be time to recalibrate policy to better match our economy.” With U.S. rate futures indicating a 91.8% probability of a 25 basis point cut at the September FOMC meeting, investors remain closely monitoring economic indicators ahead.

The critical August Nonfarm Payrolls report is expected to be a focal point for the Federal Reserve as it evaluates labor market conditions and prepares for its next strategy discussions.