On Thursday, U.S. government debt yields fell sharply, signaling increased concern about the economy ahead of Friday’s July nonfarm payrolls report.

The 10-year Treasury yield dropped to its lowest level since February, influenced by weak manufacturing data and a surge in weekly jobless claims to a near one-year high.

Traders are anticipating continued softness in the labor market.

Historically, lower Treasury yields can indicate a pessimistic economic outlook, and recent declines reflect growing expectations that the Federal Reserve might need to lower interest rates from their current range of 5.25% to 5.5%, Market Watch has reported.

The yield drop is attributed to a combination of weak economic indicators, including a sluggish manufacturing sector and higher-than-expected initial jobless claims.

Written by B.C. Begley