Treasuries: NFP Shock Reshapes Rate Cut Bets
The US Treasury market faces a seismic repricing after February's non-farm payrolls report revealed the economy unexpectedly shed 92,000 jobs — the first negative reading since December 2020. The 10-year Treasury yield, which had climbed to 4.09% heading into the release on elevated inflation fears from the Iran-driven oil shock, now confronts a dramatically different policy calculus as labor market weakness collides with persistent [price pressures](/posts/2026-02-22/deep-dive-what-is-inflation-and-how-is-it-measured-cpi-pce-and-the-numbers-that-move-markets). Heading into March 6, the yield curve told a story of inflation anxiety. The 10-year had risen 12 basis points in a week from 3.97% to 4.09%, the 2-year jumped 16 basis points to 3.54%, and the 30-year pushed to 4.72%. The 10Y-2Y spread narrowed to 55 basis points from 59, suggesting the front end was beginning to price a more hawkish Fed. Then the jobs report upended everything. With the unemployment rate ticking up to 4.4% from 4.3% in January, and the Fed funds rate still at 3.64%, markets must now recalibrate the entire trajectory of monetary policy. The question is no longer whether the Fed cuts — it's how fast, and whether the oil-driven inflation surge prevents the aggressive easing the labor market now demands.