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US 10-year treasury yield drops below 2%

FXStreet (Mumbai) - The benchmark 10-year treasury yield in the US fell below 2% on Friday after the horrible US non-farm payrolls report erased 2015 rate hike bets.

Fed rate hike bets drop

As per CME Fed watch data, the probability of a rate hike in October is now just 8%, while that in December is 28.5%. The 2-year yield, which also mimics rate hike expectations, declined from 0.68% to the current level of 0.574%.

Meanwhile, the yield on the 3-month treasury note hit the negative territory. Overall, the yield curve flattened, indicating a possibility of a major economic slowdown. The flattening yield curve also represents falling inflation expectations.

The US economy created only 142,000 jobs in September, which was 64,000 short of the consensus estimates. The average earnings data disappointed coming in at 0.0% month-on-month. The net revision for the previous two months was down 59,000.

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