Treasury yields added to their fall from the prior session on Wednesday following weaker-than-expected economic data that showed contraction in the manufacturing sector and slowing job growth in the United States.
The yield on the benchmark 10-year Treasury note fell to 1.594% while that on the 30-year Treasury bond slipped to 2.085%.; The yield on the 2-year Treasury dipped to 1.482%. Yields fall as prices rise.
Private payrolls figures reported on Wednesday showed that while U.S. employers added more jobs in September, they did so at a much slower pace than in prior months. Companies hired 135,000 more workers in the month, according to Moody's Analytics and ADP, ahead of the 125,000 that economists surveyed by Dow Jones had expected.
That was a drop from August's print of 157,000, which was revised downward from an initial estimate of 195,000. September's gain was the slowest since June and weighed the 2019 monthly average down to 145,000, a marked drop from the 214,000 for the same time period last year.
"Businesses have turned more cautious in their hiring," Mark Zandi, chief economist at Moody's, said in a statement. "Small businesses have become especially hesitant. If businesses pull back any further, unemployment will begin to rise."
The employment figures added to market worries that the U.S. economy is headed for a slowdown, and fueled angst following Tuesday's soft manufacturing data.
The Institute for Supply Management (ISM) reported Tuesday that its U.S. manufacturing index fell to 47.8 in September, the weakest print in more than 10 years. It also represented a decline since August, which saw a reading of 49.1 and represented at the time the first contraction since August 2016.
When the index is above 50 the manufacturing sector is thought to be expanding while those below 50 indicate contraction.
"While equities sold off sharply on 10/1 due to the weak ISM print, the bond market had seen this for the past 1.5 years," wrote Thomas Lee, the head of research at Fundstrat Global Advisors.
The yield curve "was flattening throughout 2017 and into mid-2018, reflecting the cumulative headwinds of weak oil (which tanked in 2018), trade tensions, strong dollar and US govt shutdown," he continued. "And of course, the real killer—Fed tightening. As this worked its way through the system, we are seeing a progressive breakdown of ISM, which is business confidence."
Investors are also monitoring the ongoing impeachment inquiry into President Donald Trump. The leaders of three House of Representatives committees on Tuesday accused Secretary of State Mike Pompeo of intimidating witnesses, adding that doing so "will constitute evidence of obstruction."
Markets remain susceptible to sounds out of Washington and Beijing on trade, with U.S. and Chinese trade officials due to resume talks this month in a bid to reach a consensus.