US Treasury yields fell across the curve for a second consecutive session on Thursday, November 5. The 5 year note led the move, down 8.1 basis points to 4.61 percent, the 10 year note fell 5.7 basis points to 4.84 percent, and the 30 year bond eased 3.1 basis points to 5.25 percent, according to the site’s market tables. The US Treasury’s own daily par yield curve put the 10 year at 4.84 percent, down 6 basis points on the day, and the 2 year at 4.46 percent, leaving the 10 year to 2 year spread at a positive 38 basis points.
The weekly moves are larger than the daily ones. Over the past week the 5 year yield is down 19.3 basis points, the 10 year down 15.2 basis points and the 30 year down 7.8 basis points, extending a decline that began with the quarterly refunding statement on November 4, which held coupon auction sizes steady, and accelerated as equities sold off. The S&P 500 fell 4.36 percent on November 5 and the Nasdaq entered correction territory as investors sold artificial intelligence and data centre stocks, pushing money into government bonds.
Rate expectations moved with the rally. The probability of a quarter point Federal Reserve increase at the December 8 to 9 meeting, as tracked by CME FedWatch, fell to 70.1 percent from 82.7 percent on Wednesday, according to market reporting of the November 5 close. Cleveland Fed President Beth Hammack argued the same day that policy will need to move to a restrictive stance, a reminder that the official pushback against easier pricing has not stopped.
The next test is this morning’s October employment report from the Bureau of Labor Statistics, due at 8:30 AM Eastern. It is the last major data print before the December meeting calendar tightens, and a weak reading would extend the front end’s rally while a strong one would test how much of the past week’s 15 to 19 basis point decline was haven demand rather than a changed view of the Fed.