Recent U.S. labor market data have emerged as the dominant influence on 2-year Treasury yields, which traded near 4.78% on October 1, 2026. The September employment report showed just 29,000 jobs added—well below consensus—with the unemployment rate rising to 4.2% and prior months revised lower, easing immediate expectations for further Federal Reserve tightening after the September 25-basis-point hike that lifted the federal funds rate to the 3.75% area. Persistent inflation pressures, including elevated core readings and external factors such as tariffs and energy costs, continue to support higher yields, while the 2-year note remains closely tied to near-term policy expectations. Traders are now focused on the October 14 CPI release and the October 27–28 FOMC meeting for clearer signals on the monetary policy trajectory through year-end.