Traders work on the floor of the New York Stock Exchange (NYSE) on November 21, 2025 in New York.
Angela Weiss | AFP | Getty Images
U.S. Treasury yields fell on Wednesday following recent signs of a weakening job market shown in private payroll data, increasing confidence that the Federal Reserve will cut interest rates by another 45 percentage points at its final meeting of the year next week.
benchmark 10 year treasury Yields fell more than 2 basis points to 4.059%, while the 30-year Treasury yield fell less than 2 basis points to 4.727%. The yield on the two-year Treasury note, the security most sensitive to short-term policy moves, fell 3 basis points to 3.486%.
One basis point equals 0.01%, and yields and prices move in opposite directions.
Private payrolls fell by 32,000 jobs in November, according to a report released Wednesday by payroll services company Automatic Data Processing. Economists compiled by Dow Jones had predicted an increase of 40,000 people in the same month.
The decline in November was also a reversal of the 47,000 increase in October.
“The negative ADP jobs report in November added some impetus to the bond market,” said Christopher Rapkey, chief economist at FWDBONDS. Yields are falling “on expectations that Fed officials will cut interest rates for a third time at next week’s meeting.” The Fed previously cut interest rates by a quarter of a percentage point in September and again in October. There were no meetings in November.
The ADP jobs report reinforced already widespread belief that the central bank will continue to ease monetary policy next week in preparation for a looming labor market slowdown. Interest rate futures trading has an 89% chance that the benchmark overnight federal funds rate will fall to 3.50-3.75% next week, according to CME’s FedWatch tool. A month ago, market odds were close to 67%.
“The probability of a rate cut in December went from 30% to (approximately) 95%, all in the space of two weeks, which is an amazing change,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “This morning’s ADP numbers confirm what many dovish people are saying: It’s important to focus on the weakening labor market rather than worrying about inflation in the 2-3% range.” He added that a quarter-point rate cut was “a certainty.” It will be announced on December 10th.
But above that, Zaccarelli said, the interest rate outlook gets a little confusing.
“Our forecast is for the dovish side to prevail, with a number of rate cuts next year, but the cuts could be more spaced out (e.g., rates left on hold over multiple meetings) and could result in fewer rate cuts than currently expected. So while we’re bullish heading into the new year, we’ll be more cautious in 2026,” he said.
Following the ADP report, ISM Services PMI rose slightly to 52.6% in November, giving investors hope that the US economy remains stable. This is slightly higher than the Dow Jones forecast of 52.5%.
Other economic reports scheduled to be released this week include weekly new jobless claims on Thursday and September’s lagged personal consumption expenditures index on Friday.
