U.S. Jobs and Treasuries: What (Hasn’t) Changed

U.S. Jobs and Treasuries: What (Hasn’t) Changed

BLS data frozen at August report; on Oct. 9 markets read dovish Fed minutes and a steeper curve

Key points (as of October 9, 2025)

• The September Employment Situation report was not released due to the federal shutdown; the latest official data available remain from August.
• In August: payrolls +22k, unemployment 4.3% — signs of cooling already in place before the statistical halt.
• On Oct. 9, Treasuries continued a bull-steepening trend: 2Y 3.60%, 10Y 4.14%; 2s10s spread ≈ +54 bps.
• FOMC minutes (published Oct. 8) pointed to weaker job expectations and a dovish bias, though with internal divisions.

What the (official) labor data show

• Nonfarm Payrolls (PAYEMS): +22,000 in August; sideways trend since spring.
• Unemployment rate (UNRATE): 4.3% in August (seasonally adjusted). The next update scheduled for Oct. 3 was not released.
• Job Openings (JOLTS): last official data (through August) indicate labor demand easing from peak levels.

Calendar note: the September report (scheduled for 10/03/2025) was not issued. The BLS suspended updates due to the shutdown starting Oct. 1. Until agencies reopen, no new official labor data exist beyond August.

How markets interpreted it (through Oct. 9)

• U.S. government yields: on Oct. 9, the 2Y rose to 3.60% and the 10Y to 4.14%; the 2s10s curve steepened (~+54 bps), reflecting expectations of short-term rate cuts already priced in and a higher term premium/fiscal reacceleration on the long end.
• FOMC minutes (Sept. 16–17), released Oct. 8: “almost all” expected the 25 bp cut in September; about half foresaw another cut in October. The tone acknowledged “downside risks to employment.”

What the Fed (officially) signals

• Official documents:
• FOMC minutes (Oct. 8): dovish bias but strong uncertainty on the policy path.
• September SEP (Sept. 17): median dot plot points to further cuts in 2025 from the September range (4.00–4.25%).

In short: as of Oct. 9, the “official” reading supports the idea of additional easing if labor market cooling (so far seen in August) is confirmed once data releases resume.

Implications for the bond market (Q4 2025)

(General strategic indications – not personalized financial advice)

1. Duration: slightly extend
• With a steepening curve, extra carry/rolldown shifts to 5–10 years. A core intermediate duration can balance sensitivity to future cuts with long-term volatility.
2. Defensive barbell
• Short end (1–3Y high quality) to capture expected cuts with limited price risk; intermediate (7–10Y) for potential capital gains if growth/labor weakens further.
3. IG > HY in current phase
• With softer labor data (August) and macro uncertainty, favor investment grade over high yield, reducing exposure to cyclical, highly leveraged sectors.
4. Selective TIPS exposure
• With inflation still above target in Fed projections but growth risk rising, use TIPS as a satellite allocation (5–10Y) rather than a core holding.
5. Curve strategies
• Tactical 2s10s steepener: the official backdrop (minutes + SEP) and Oct. 9 levels suggest room for further front-end easing versus the long end. Manage with tight stops: resumed data releases could shift levels quickly.

Risks to monitor

• Resumption of BLS/DOL releases: a backlog of reports could move the curve sharply.
• Gap between SEP projections and realized data: if labor proves stronger than August data suggest, rate cuts may be less pronounced.

Main official sources
BLS Employment Situation (August 2025) and release schedule; suspension notice due to shutdown.
FRED – Treasury yields (DGS2, DGS10); unemployment (UNRATE); job openings (JTSJOL).
Federal Reserve – FOMC Minutes (Oct. 8) and SEP (Sept. 17).

Disclaimer: Informational content based on official data available as of Oct. 9, 2025; not a solicitation or personalized investment recommendation.