NFP hit 130k (consensus: 65k) triggering bear flattening across the US Treasuries curve. USD rates were wrong footed heading into this set of labour market data. Notably, high frequency data last week pointed to weakness and USD rates had adjusted lower accordingly. The overall set of data was firm, with the unemployment rate edging down to 4.3% and average hourly earnings at 0.4% MoM sa in January. That said, there were a few nuances that caused investors to pare optimism somewhat. First, job growth appeared concentrated in the healthcare segment, suggesting that hiring was not quite broad-based. Second, job gains fell to 15k per month in 2025 following revisions, down from an initially reported 49k. Third, there was a net downward revision of 17k jobs for the prior two months.
This set of data reinforces the view that the labour market is still relatively firm with some pockets of concerns. The case for imminent rate cuts has diminished (risks are skewed towards mid-to-late 2026). The market has adjusted accordingly paring rate cut pricing for the year down to two. 2Y US yields remain comfortably in the 3.4-3.6% range and we think fading extremes makes sense. Meanwhile, lingering underperformance in software stocks may be driving some haven demand for long-end USTs. We note that 10Y yields could not reclaim 4.20% despite the outsized NFP print. 
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