US Treasury yields climb as strong jobs data, midterm polls weigh; 10-year yield eyes 5% again

US Treasury yields moved higher on Tuesday as stronger than expected labour market data reinforced expectations of economic resilience while investors remained cautious ahead of midterm election results that could reshape the country’s fiscal outlook, Reuters reported.

The benchmark 10 year Treasury yield rose 6 basis points to 4.954%, while the 30 year yield advanced 5.5 basis points to 5.324%. The two year yield, which is particularly sensitive to Federal Reserve interest rate expectations, climbed 4.6 basis points to 4.629%.

The gap between two year and 10 year Treasury yields, a closely watched measure of the yield curve, stood at a positive 32.3 basis points, Reuters data showed.

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Yields briefly pared their gains after oil prices fell following President Donald Trump’s comments that he would cut funding for Israel after the year end. However, the decline was short lived as fresh economic data renewed confidence in the strength of the US economy.

Strong labour market data lifts yields

September job openings in the US increased sharply while layoffs declined, pointing to a labour market that remains relatively resilient despite subdued employment gains during the month.

Read more: Polymarket unit gets US industry organization’s approval to be futures brokerThe latest figures added to evidence of stronger economic activity, with factory orders and durable goods data also indicating underlying strength.

“Treasury yields are repricing higher following an unambiguously strong set of economic data. JOLTS, factory orders, and durable goods are all pointing to resilient growth despite the weakness in AI and tech,” said Thomas Urano, co-chief investment officer at Sage Advisory in Austin, Texas.

Midterm results keep bond investors cautious

Despite the stronger economic signals, investors remained reluctant to take large positions ahead of the US midterm election results, which will determine control of Congress for the remaining two years of Trump’s presidency.

A divided Congress is widely seen as the base case scenario on Wall Street, potentially limiting either party’s ability to push through its policy agenda. However, uncertainty over the outcome has kept bond traders cautious, Reuters reported.

“The big question mark for today is where the midterms are going, which direction the results are going to lean and how that’s going to impact things,” Urano said.

The election outcome could influence expectations around US fiscal policy, government borrowing and Treasury supply, all of which are important drivers of bond yields.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)