Bond Market Update

Data Recon

• The ISM Services PMI increased to 54.9% in September (Briefing.com consensus 51.6%) from 51.5% in August. That is the highest reading since February 2023. The dividing line between expansion and contraction is 50.0%, so the September reading reflects services sector activity accelerating from August.
  • The key takeaway from the report is that overall activity in the largest sector of the U.S. economy accelerated in September, albeit without an expansion in employment activity, as new orders increased along with prices. net-net, this is a report that meshes more with a soft landing outcome than a hard landing one.
• Factory orders decreased 0.2% month-over-month in August (Briefing.com consensus 0.1%) following a downwardly revised 4.9% increase (from 5.0%) in July. Excluding transportation, factory orders decreased 0.1% on the heels of a 0.3% increase in July. Shipments of manufactured goods fell 0.5% in August following a 0.8% increase in July.
  • The key takeaway from the report is that business spending rebounded in August.
• Yield Check:
  • 2-yr: +4 bps to 3.68%
  • 3-yr: +5 bps to 3.60%
  • 5-yr: +5 bps to 3.60%
  • 10-yr: +4 bps to 3.82%
  • 30-yr: +3 bps to 4.16%