Treasury Rally Falters After Job Openings Data Misses Expectations Ahead of Major Auction

The Treasury market reversed earlier gains as the October job openings report showed a decline to 8.2 million, falling short of the expected 8.6 million. This marked the lowest level since early 2022 and signaled a potential shift in labor market dynamics. The dip in vacancies, combined with a slight increase in the unemployment rate to 4.1%, weighed on expectations for prolonged Fed rate hikes. Investors reacted by pushing 10-year Treasury yields up 3 basis points to 4.32%, erasing gains from the prior session. The 2-year yield rose 2.5 basis points to 4.61%, reflecting renewed caution over the federal funds rate path. With the Federal Reserve's upcoming 10-year note auction set for December 11, market participants are adjusting positions amid growing uncertainty about demand and yield levels. The auction, expected to offer $58 billion in new debt, is being closely watched as a gauge of investor appetite in a higher-rate environment. Analysts note that weak labor data may support demand, but the upcoming supply could pressure yields if demand fails to meet expectations. The benchmark 10-year note’s yield has now rebounded above 4.3%—a level not seen since mid-2023. Market pricing now reflects a 60% chance of a rate cut by the Fed’s March meeting, up from 45% last week. This shift underscores growing bets on a dovish pivot, though the timing remains contingent on incoming data, including inflation and consumer spending reports due in the coming weeks.