Treasury yields won’t stay down. What’s driving rates

US 10-year yields traded as low as 4.22% after non-farm payrolls but have rebounded to 4.32%.

It’s tough to say what’s driven the reversal but here is a stab at it:

• The non-farm payroll report was skewed by the hurricanes and strikes and the market thinks the jobs maket is good
• ISM prices paid made a surprising jump, highlighting upside inflation risks
• The election is coming, though odds have shifted towards Harris in the past week, Trump is still favored and a red sweep would lead to big deficits
• A number of economic reports have highlighted uncertain business and consumer spending ahead of the election, the market could be sensing strength once the uncertainty is lifted
• Amazon earnings underscored a strong consumer
• It’s a new month and there are selling flows, perhaps from abroad

With the rebound in yields, the dollar is back near the highs of the day, including USD/JPY, which is up 120 pips from the non-farm payrolls lows.