Before Friday’s October US jobs report, bond traders positioned for further
gains in US Treasuries as expectations of additional Fed hikes cooled. A
post-midterm global equity sell-off drove safe-haven flows this week; the
10-year Treasury yield fell to its lowest since early September and was 4.82% on
Friday amid intensified equity weakness. The rally has bolstered bets on
continued yield declines: option trades target a 10-year yield of 4.7% by next
weekend, and another expiring Nov. 20 targets roughly 4.35%. TD Securities US
rates strategist Gennadiy Goldberg said he expects Friday’s data to be slightly
weak but that markets remain focused on fundamentals, describing the US economy
as still fairly strong and the labor market as showing "low hiring, low
layoffs," and noting markets have sharply pared rate-hike expectations in recent
weeks.
