The 10-year Treasury yield fell on Monday as investors' concerns on the economic outlook rise amid a global stock market-selloff.
At 3:52 p.m. ET, the yield on the 10-year Treasury slipped 3 basis points at 3.765%, its lowest level since June 2023. Meanwhile, the 2-year Treasury yield was marginally higher at 3.875%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
The yield curves on the 2-year Treasury and 10-year Treasury briefly normalized Monday morning, with the spreads turning positive, before re-inverting.
Yields briefly rebounded on Monday before inching lower again, after fresh economic data showed the U.S. services sector grew at a faster-than-expected pace in July. The ISM services index recorded a 51.4% reading for the month, representing the share of purchase managers reporting expansion. That is up from 48.8% in June and better than the Dow Jones estimate for 50.9%.
The services index offered some positive economic news to counter fears of a looming recession on the back of weak economic numbers last week.
On Friday, July's nonfarm payrolls report showed that job growth for the month totaled just 114,000, which was below the 185,000 Dow Jones estimate as well as June's revised figure of 179,000. The jobs report also showed that the unemployment rate unexpectedly rose to 4.3%, its highest level since October 2021.
Money Report
The data suggested an easing of the labor market, which prompted concerns about a recession. That came after the Fed earlier in the week left interest rates unchanged and hinted at a September rate cut. But many investors have since questioned whether the central bank should have moved to cut rates already to ward off an economic downturn.
"Markets were on edge before Friday but a weak payrolls has really escalated a profound move across the globe. However the reality is that although payrolls was disappointing it's hard to know how disappointing given the distortions from Hurricane Beryl. It's like the market has added up 2+2 and made 9," wrote Deutsche Bank strategist Jim Reid. "It's hard to believe such market moves would have occurred in any other month."
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Markets are now pricing in an increasingly high chance of a 50 basis-point rate cut when the Fed meets in September, CME Group's FedWatch Tool showed.
Recession fears spilled into global markets. In Japan, the Nikkei 225 had its worst day since 1987, plunging 12%. Stocks in Europe were also down sharply on Monday.
