Following the release of strong U.S. employment data on Wednesday, economists at TD Securities have postponed their forecast for the timing of the Federal Reserve's next interest rate cut from March to June. The firm continues to project a total of 75 basis points in rate cuts for the year, bringing the terminal rate to 3%, with 25-basis-point reductions expected in June, September, and December.

A team led by Chief U.S. Macro Strategist Oscar Munoz noted in a report that the anticipated policy easing is not driven by deteriorating economic conditions but rather reflects a "normalization" of monetary policy as inflation gradually returns to target levels.

They also indicated that the improved employment outlook should allow the Fed to shift its focus toward its inflation mandate and projected inflation progress through 2026.

TD Securities stated that U.S. Treasury yields are likely to continue declining this year, with the 10-year yield expected to fall to 3.75% by year-end, a revision from their previous forecast of a steeper drop to 3.5%.

In the nearer term, however, they anticipate the 10-year yield will remain within a range of 4.10% to 4.30% until more information on the economy's health becomes available.

Additionally, they suggested that the Treasury yield curve "should be near its steepest level and gradually flatten," expressing a preference for flattening trades in the 2s10s spread.