📌 Weak Non-Farm Payrolls Quash Rate Hike Expectations as Treasury Yields Show Rare Sideways Muting
The U.S. September (9) non-farm payroll data came in weaker than expected, breaking the relatively strong seasonal pattern of the past three years. This change directly dismissed market expectations for the Federal Reserve to continue raising rates in October (10), prompting policymakers to lean toward standing pat.
According to conventional financial transmission logic, a cooling labor market means a reduced risk of economic overheating, which typically drives down long-term Treasury yields, thereby alleviating high-interest-rate pressure across various asset classes and directly benefiting risk assets as a whole.
However, the secondary market’s actual trajectory showed a distinct disconnect from theoretical deductions. Following the data release, both long-term and short-term yields in the Treasury market remained in a virtually flat, sideways state intraday, exhibiting a rare insensitivity to cooling employment data that should have been viewed as favorable.
This price reaction desensitization indicates that bond trading desks did not rush to go long on Treasuries simply because of a pause in the rate-hiking cycle. A single-dimension weakening in labor can no longer easily drive yields lower, as capital remains on high alert in the face of forward uncertainties.
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