Bond yields declined on Wednesday as disappointing economic data increased expectations for interest rate cuts. The yield on the U.S. 10-year Treasury note dropped by 2.42% to 4.352%, while the 30-year yield fell 1.95% to 4.886%.
The decline followed the release of the ADP National Employment Report, which showed the U.S. added just 37,000 private-sector jobs in May—well below the 114,000 forecast by economists. “After a strong start to the year, hiring is losing momentum,” said ADP Chief Economist Dr. Nela Richardson. Investors now await the more comprehensive nonfarm payroll report due tomorrow.
In addition, the ISM services index revealed that the U.S. services sector—the largest component of the economy—contracted in May for the first time since June 2024. The Services PMI registered at 49.9, down from April’s 51.6 and below the expected 52.0.
These weak indicators pushed market expectations for rate cuts higher. The probability of a July Federal Reserve rate cut rose from 24% to 28.7%, while the odds for a September cut increased from 54.5% to 56.5%.
President Donald Trump intensified pressure on Federal Reserve Chair Jerome Powell, responding to the jobs report with a social media post stating: “Too Late. Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!”
Trump’s stance was echoed by others in his administration. Bill Pulte, Director of the Federal Housing Finance Agency (FHFA), said, “Jerome Powell must lower rates, and now. Enough is enough.”
