U.S. Treasury yields fell to multi-week lows, with short-term yields leading the decline. The unexpected rise in the U.S. unemployment rate for November is seen as a reason for a potential Federal Reserve rate cut in December.
Short-term bonds surged, widening the 5s30s yield spread by over 4 basis points. As traders reassessed the likelihood of a rate cut on December 18, the trading volume of federal funds rate futures spiked.
Short-term yields dropped nearly 5 basis points, while long-term yields remained stable. The 10-year yield fell below the 50-day moving average for the first time since early October. Most gains occurred shortly after the non-farm payroll data release, driving January federal funds futures to new highs.
