Treasury Yields Fall: Job Data Fears Drive Rate Cut Bets

Yields Slide Amid Uncertainty

On July 1, 2025, U.S. 10-year Treasury yields dropped to 4.228% from 4.290%, hitting a daily low of 4.228% and a high of 4.287%. The decline reflects growing market expectations of at least two Federal Reserve rate cuts by year-end, fueled by forecasts of weakening U.S. employment data. June’s non-farm payrolls are projected to fall to 115,000 from 139,000, with unemployment ticking up to 4.3% from 4.2%. Will these signals push the Fed to act swiftly?

Market Signals Rate Cuts

The futures index for interest rates rose to 64 points, aligning with Federal Open Market Committee projections of two 25-basis-point cuts in 2025. This anticipation, driven by labor market concerns, weakens yields. For instance, a New York bond trader might see reduced returns, prompting a shift to riskier assets.

Economic Context

The looming jobs report, critical before the Fed’s July meeting, could sway Chair Jerome Powell’s decisions. A weak report might hasten rate cuts, further pressuring yields. In 2022, similar data triggered a 0.5% yield drop, hinting at potential market shifts.

Looking Forward

If jobs data disappoints, yields could dip below 4.2%, impacting the dollar. Stronger-than-expected numbers might stabilize yields near 4.3%. The Fed’s next moves will shape markets, with investors braced for volatility.