Bond Market Update

Fed Insight

• Fed Governor Cook (FOMC voter) said earlier today:
  • "If the labor market and inflation continue to progress in line with my forecast, it could well be appropriate to lower the level of policy restriction over time until we near the neutral rate of interest, or the point when monetary policy is neither stimulating nor restricting economic growth. However, if inflation progress slows and the labor market remains solid, I could see a scenario where we pause along the downward path. Alternatively, should the labor market weaken in a substantial way, it could be appropriate to ease policy more quickly."
• Fed Governor Bowman (FOMC voter) said a short time ago:
  • "My estimate of the neutral policy rate is much higher than it was before the pandemic, and therefore we may be closer to a neutral policy stance than we currently think. I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognizing that we have not yet achieved our inflation goal and closely watching the evolution of the labor market. We should also not rule out the risk that the policy rate may attain or even fall below its neutral level before we achieve our price stability goal."
• Yield check:
  • 2-yr: +3 bps to 4.30%
  • 3-yr: +2 bps to 4.25%
  • 5-yr: +1 bp to 4.26%
  • 10-yr: +2 bps to 4.39%
  • 30-yr: +1 bp to 4.57%