(Bloomberg) -- Treasury yields edged lower, with the 10-year nearing 4%, as data affirming labor-market weakness and remarks from Federal Reserve Governor Stephen Miran bolstered expectations for an interest-rate cut next month.

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Miran reiterated his view that the US economy needs large rate cuts. Also, Treasury Secretary Scott Bessent said the US government shutdown curbed economic growth by 1.5%.

A slump in oil prices sparked by the prospect of a Ukraine peace deal and steeper gains for UK government bonds contributed to the bond rally. Meanwhile, expectations that month-end will drive demand to buy Treasuries discourage short positions that might otherwise slow the rally.

Yields were mixed with the rates on longer-dated securities falling and shorter tenors lagging ahead of an auction of five-year notes at 1 p.m. New York time. The $70 billion auction — the biggest of the US government’s seven monthly fixed-rate debt auctions — follows a two-year note sale that drew good demand Monday.

With the hangover from the six-week US government shutdown that ended Nov. 12 continuing to delay official economic data, a debate over the likelihood of another Fed rate cut next month has turned on industry data such as ADP Research’s private payrolls gauges. For the four-week period ending Nov. 8, ADP reported an average drop of 13,500.

What Bloomberg Strategists say...

“Ten-year yields will need a bigger macro catalyst to slice through such a strong technical area at 4%. A move below that may depend on the performance of risk assets but more likely the Dec. 10 Fed meeting where traders have revived rate-cut hopes.”

—Alyce Andres, Macro Strategist, Markets Live

For the full analysis, click here.

Market-implied expectations for a quarter-point rate cut on Dec. 10 held steady, with around 20 basis points of the move, close to 80%, priced in.

“The labor market is certainly softening and therefore getting ahead of it makes a little bit of sense,” Krishna Memani, chief investment officer at Lafayette College, said on Bloomberg Television. At the same time, the elevated inflation readings that some Fed policymakers say warrant pausing in December mean that 10-year Treasury yields “cannot drop too much even when growth is slowing.”

The Census Bureau and the Bureau of Labor Statistics released retail sales and producer prices data for September, more than a month later than originally scheduled, that were broadly in line with economist estimates. Neither elicited much market reaction.

(Updates with strategist quote.)

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