US Treasury Yields Extend Declines From Two-Decade High as October Fed Rate-Hike Bets Sink Following Downbeat Jobs Report

10:09 AM EDT, 10/02/2026 (MT Newswires) -- US Treasury yields fell, extending a retreat from a two-decade high, as a weak September jobs report was accompanied by downward revisions to the previous two months and slashed the odds for a back-to-back monetary policy tightening in October. The 10-year government bond yield dropped 2.9 basis points to 5.205% Friday, extending its declines from the strongest level since 2002 earlier this week. The 30-year rate fell 2.2 basis points to 5.581%, also building on declines from its loftiest level since 2002. The 2-year yield slid 2.7 basis points to 4.760%. The September employment report from the Bureau of Labor Statistics showed nonfarm payrolls rose by 29,000, below the 90,000-increase expected in a Bloomberg-compiled survey, while August jobs were revised downward to a 133,000 increase and July payrolls were adjusted lower to a 10,000 decrease, for a net reduction of 60,000 jobs. The unemployment rate rose to 4.2% in September from 4.1% in August, versus no change expected, while the labor force participation rate rose to 61.8% from 61.6% in August and the size of the labor force expanded. Hourly earnings rose by 0.1%, missing expectations for 0.3% growth and slower than the 0.3% increase in August. Hourly earnings were up 3.0% from a year ago, slower than the 3.1% year-over-year gain in August. Traders slashed near-term probability of the Federal Reserve raising its target rate by 25 basis points in October to 18% from 24% a day ago and 64% a week earlier, according to the FedWatch tool. The remaining 82% likelihood is that rates will remain unchanged at the current 3.75% to 4.00% range. Globally, government bond yields declined in the United Kingdom, Germany, Italy, Australia and Canada. Yields were mostly higher in France, barring the long end, and mixed in Japan. Sumitomo Mitsui DS Asset Management unwound its position in French government bonds amid worries about the country's fiscal conditions, Bloomberg News reported Friday. France's debt challenges prompted its government to push for a smaller budget deficit. Crude oil traded lower after midday, also helping push yields lower. The front-month US West Texas Intermediate crude oil contract sank 4.1% to $89.00 per barrel, and the global benchmark North Sea Brent futures dropped 2.9% to $99.33 per barrel.