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Sept. Jobs Report Helps Bolster Rate-Cut Odds
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November 21, 2025
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5:39Now PlayingYelena Shulyatyeva, Senior Economist at the Conference Board, breaks down the lessons learned from the delayed September jobs report released Thursday.
Treasuries rallied after Federal Reserve of New York President John Williams said he saw room for the central bank to lower interest rates “in the near term.”
Traders, who earlier this week had all but abandoned expectations for further easing this year, resumed pricing better than 50% odds for a quarter percentage-point reduction on Dec. 10 after Williams said monetary policy was “modestly restrictive.”
A delayed September jobs report Thursday showing rising unemployment also helped bolster rate-cut odds, which had been eroded as US government officials said no more labor market data would be released until after the Fed decision.
Swap contracts linked to Fed rate decisions priced in about 15 basis points of easing, about 60% of a quarter point move. Two-year Treasury yields, more sensitive than longer-maturity tenors to changes in Fed policy, dropped as much as five basis points to 3.48%, the lowest level since Oct. 28.
“Williams’ comments are key because he is one of the middle ground voters that might ultimately determine the outcome of the December rate decision,” Vail Hartman, a US rates strategist at BMO Capital Markets, said. “It wasn’t previously clear where he stood on the outlook for the December meeting.”
Treasuries held smaller gains before Williams spoke amid weakness in US stock index futures, which subsequently recovered. Declines for stocks earlier this week fueled haven demand for government bonds, offsetting some of the erosion in confidence about a December rate cut. Global equities are on track for their steepest drop since the tariff turmoil of April.
The US 10-year yield has fallen nine basis points over the past five days to 4.06%, its biggest decline since the week ending October 10. The two-year has fallen by a similar margin, its largest weekly drop since September.
Fed officials appear deeply divided on their December decision, however. Three objected to the last cut in October, and several others — including most recently Austan Goolsbee and Michael Barr — are at least dubious about the need for another one this year in light on inflation trends.
Boston Fed President Susan Collins, speaking after Williams on Friday, reiterated that upward pressure on consumer prices made her hesitant about the next policy move.
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