Investors who have been hedging deeper declines in US Treasury bonds are preparing for the US non-farm payroll report to be released on Friday, which is influenced by hurricanes and strike activities, and will also provide the final guidance for next week's Federal Reserve decision.

US Treasury bonds saw little change in early Asian trading on Friday, wrapping up the worst monthly performance in two years in October. With only a few days left until the election and the Federal Reserve meeting, a daily yield volatility index hit its highest level in a year, as traders prepare for further declines that may push the 10-year yield to touch 4.5% highs over the next three weeks. Currently, the yield for this type is fluctuating around 4.3%.

Jack McIntyre, portfolio manager of Brandywine Global Investment Management, stated that this position preparation indicates that the possibility of a strong performance in the job market data on Friday is something the market cannot ignore. Although if the data is weak, fund managers can attribute it to the impact of strikes and hurricanes, but if it performs strongly, the pressure on decision-makers to cut interest rates will diminish.

"I don't think the Federal Reserve will bring too many surprises to the market," he said. McIntyre expects a 25-basis-point rate cut at next week's meeting, in line with the expectations of most economists surveyed by Bloomberg, but expects policymakers to send a hawkish signal and "signal a temporary pause in rate cuts".

Selling of US Treasuries has pushed yields up by about 60 basis points in the past month, in part due to unexpectedly strong September non-farm payroll data. Subsequently, as a result of the deadlock situation in the election on November 5 between Donald Trump and Kamala Harris, as well as uncertainty in the Federal Reserve's policy path, market volatility has increased.

The ICE Bank of America Merrill Lynch US Bond Volatility Index, a closely watched measure of volatility in the US bond market, hit its highest closing level of the year this week, indicating that traders are willing to pay a high price to hedge against intensified market turmoil.

Traders currently expect a 90% probability of the Fed cutting interest rates by 25 basis points next week. The swap rate market expects a total rate cut of about 117 basis points in the next 12 months, a decrease of about 67 basis points from expectations at the beginning of October.