The yield on the 10-year US Treasury note rebounded from its early decline to remain above the 4.3% mark on Friday, reaching its highest level in nearly four months and reflecting a 50 basis point surge in October as recent economic data supported a less-dovish stance from the Federal Reserve.
10-year T-Note yield rebounds
ISM data indicated that US factory activity continued to contract in October; however, an unexpected increase in its price component raised concerns that inflation may be more persistent than anticipated, suggesting that a prolonged period of restrictive interest rates may be necessary to align with the Fed’s target.
Rebounds follows NFP data
This data was released shortly after a significant downside surprise in nonfarm payrolls, though hurricanes and strikes during the period have complicated the insights that can be drawn regarding the underlying labor market. Meanwhile, the prospect of a potential Trump presidency following next week’s election exerted additional pressure on long-dated bonds, as expectations for expansionary fiscal policies could lead to a rise in credit risk for US debt, thereby limiting the decline in yields.
