U.S. Treasury bonds closed higher, led by gains in short-term and intermediate maturities. The rally was driven by three weaker-than-expected labor market indicators released in the morning session: the Challenger job cuts report, weekly initial jobless claims, and JOLTS job openings data. Strength in short-dated UK gilts, following a dovish policy statement from the Bank of England, coupled with a broad sell-off in U.S. equities, provided additional support for U.S. government debt. Long-end swap spreads narrowed further.

Shortly after 3:00 p.m. New York time, yields on 2-year to 5-year Treasury notes were down by at least 8 basis points for the session. The 2s5s30s butterfly spread fell by approximately 3 basis points.

The 10-year Treasury yield, hovering near 4.21%, declined more than 7 basis points on the day.

The UK gilt yield curve steepened after the Bank of England held rates steady but revealed a 5-4 vote split and stated that rates "could be lowered further," prompting a dovish repricing in interest rate swaps.

Following the release of the three U.S. employment reports, Treasury yields fell after each data point. Swap contracts began pricing in a greater amount of Federal Reserve rate cuts by year-end. The implied amount of easing by December widened to around 55 basis points by the close, compared to 49 basis points at Wednesday's close.

Long-end swap spreads continued their recent narrowing trend, with indications that positions betting on spread-widening were still being unwound. The 30-year swap spread fell to its lowest level since mid-December.

As of 3:11 p.m. ET: - The 2-year Treasury yield was 3.4833%; - The 5-year Treasury yield was 3.7516%; - The 10-year Treasury yield was 4.2098%; - The 30-year Treasury yield was 4.8633%; - The spread between 5-year and 30-year yields was 110.99 basis points; - The spread between 2-year and 10-year yields was 72.45 basis points.