U.S. yields drop, oil dips on oversupply concerns

10-year U.S. Treasury yields were lower for a second day, while oil prices sagged on oversupply concerns as hopes increased for a Russia-Ukraine peace deal

MSCI’s global equities gauge dropped on Tuesday and 10-year U.S. Treasury yields were lower for a second day, while oil prices sagged on oversupply concerns as hopes increased for a Russia-Ukraine peace deal.

The U.S. Labor Department reported a nonfarm payroll increase of 64,000 jobs last month and that the unemployment rate rose to 4.6%. November represented a bounce-back from October’s 105,000 jobs decline, which included the departure of more than 150,000 federal employees who took deferred buyouts as part of the Trump administration’s push to shrink the government’s footprint.

However, the clouding of the data from the 43-day U.S. government shutdown through October and into mid-November created some uncertainty about what the report really means for the economy and the U.S. central bank’s outlook for interest rate policy after its 25-basis-point cut last week.

While relatively low wage growth and anaemic November job creation provided hope for more Fed rate cuts, David Wagner, portfolio manager at Aptus Capital Advisors, said the return to job increases in November could also support more hawkish views that rates should hold steady.

Investors are still trying to digest this data. The jobs report was somewhat Goldilocks – not too bad and not too good. Both hawkish and dovish investors have enough data to prove their current thesis, Wagner said while also pointing to “the noise in the data given that the shutdown continued into the middle of November.”

While the central bank’s estimate last week was for one rate cut for 2026, traders have been betting on two or more cuts, according to CME Group’sFedWatch tool.

While bets were little changed after Tuesday’s data, Adam Rich, deputy CIO and portfolio manager at Vaughan Nelson, said that the stock market’s decline suggests concern about the interest rate outlook.

The market is having a really hard time figuring out how many interest rate cuts we’re going to get from the Fed, Rich said.

The jobs data is looking a little stronger than what people were expecting, but it’s also low enough that we could probably get more cuts in the near future than what the market is expecting. But maybe investors were hoping that it would be weaker than expected so that cuts would be coming more aggressively, he added.