U.S. Treasury yields edged lower on Monday as traders dialed back bets on further Federal Reserve rate hikes, taking their cue from September's soft jobs report and looking ahead to Wednesday's release of the Fed's latest meeting minutes for clues on the path of rates.
The data behind the move: the U.S. economy added just 29,000 jobs in September versus roughly 90,000 expected, the unemployment rate ticked up to 4.2 per cent, and annual wage growth slowed to 3.0 per cent — its weakest pace since May 2021. Money markets now price only about a 20–22 per cent chance of an October rate hike, down from roughly 64 per cent a week ago on CME FedWatch, with December-hike odds trimmed as well.
The mood in risk assets turned upbeat: Japan's Nikkei rose about 2 per cent, Asian markets climbed broadly, and S&P 500 and Nasdaq futures advanced, while the dollar wobbled and oil declined with Brent around $101.63 a barrel. A Dow Jones/Morningstar week-ahead note framed the Fed minutes as the event that decides whether the hike debate is truly over.
For borrowers and bond desks alike, the message of the day is patience: the hiking cycle that rattled markets last week looks, for now, like it has run out of momentum. All eyes on Wednesday's minutes.
