U.S. Treasury yields fell for a fifth consecutive week as crude oil prices plunged more than $13 per barrel and a sharp selloff in AI-related equities, including a 5.5% drop in the Nasdaq on Thursday, fueled safe-haven demand for government bonds. The 10-year Treasury yield declined eight basis points to 4.86% and the 30-year yield fell five basis points to 5.26%. Economic data pointed to a resilient labor market, as October payrolls increased by 165,000 versus 70,000 expected, the unemployment rate declined to 4.1% and job openings rose to 7.5 million. Friday’s stronger-than-expected employment report pushed fed funds futures to an 80% probability of a December rate hike. Municipal bonds outperformed Treasuries, as 10-year tax-exempt yields declined 15 basis points to 3.24% and 30-year tax-exempt yields fell 12 basis points to 4.69%, supported by approximately $18.5 billion of November 1 redemptions. Municipal bond funds recorded $287 million of inflows last week, down from $1.74 billion the prior week. Negotiated municipal supply is expected to be light at approximately $3.8 billion this week. Investors will focus on October CPI and PPI inflation data, existing home sales, jobless claims, AI-related earnings and remarks from several Fed officials.

The week began with modest upward pressure on treasury yields which persisted through the mid-week Fed meeting, where the Fed held rates steady while also signaling that persistent inflation and solid economic growth could lead to another rate hike in December. Treasury yields reversed course and declined later in the week following a lower core PCE inflation reading of 2.5% despite stronger than expected GDP growth of 3.4%. Overall, Treasury yields declined for the fourth consecutive week, with the 10-year yield falling six basis points to 4.94% and the 30-year yield dropping two basis points to 5.31%. Municipals finished the week with a firm tone, extending the prior week’s positive momentum as a light issuance calendar and steady customer demand supported the secondary market. Municipals outperformed treasuries with the 10-year MMD falling 13 basis points to 3.39% and the 30-year MMD falling by four basis points to 4.81%. The coming week features several major events, led by the U.S. midterm elections. Investors will also assess developments in the Middle East and Ukraine. The economic calendar will be highlighted by Friday’s employment report along with jobless claims and the EIA petroleum status report. Other key releases include ISM manufacturing and services surveys, JOLTS job openings and the University of Michigan consumer sentiment index.