U.S. Treasury Yields Dip as Job Openings Decline, Showing Signs of Cooling Labour Market

U.S. Treasury yields dropped to their lowest point in nearly three weeks on Tuesday following a report indicating a larger-than-anticipated decrease in job openings in April. Investors are now awaiting the upcoming job data release on Friday, which could offer insights into the Federal Reserve’s future policy decisions.

The data revealed that job openings, a gauge of labor market demand, decreased by 296,000 to 8.059 million by the end of April, marking the lowest level since February 2021. Vail Hartman, a U.S. rates strategist at BMO Capital Markets in New York, noted that the report suggests a softening in the labor market, aligning with the Fed and market preferences.

The benchmark 10-year note yields declined by 7 basis points to 4.332%, reaching as low as 4.314%, a level not seen since May 16. Similarly, two-year note yields fell by 5 basis points to 4.773%, hitting 4.749%, also the lowest since May 16.

Market speculations are leaning towards a potential interest rate cut by the U.S. central bank amidst cooling economic conditions, leading to a drop in Treasury yields. Analysts are anticipating the release of May’s job data on Friday, with expectations that employers added 185,000 jobs during the month. This forecast follows a weaker-than-expected job growth in April, which saw a gain of 175,000 jobs, the lowest in six months.

Recent economic reports, such as the Personal Consumption Expenditures (PCE) data for April showing stable inflation and the May report indicating a slowdown in U.S. manufacturing for the second consecutive month, have contributed to the surge in bond prices.