Bond Market Update

Hitting snooze button

• Treasuries have been in snooze mode for most of the cash session with neither buyers nor sellers showing much conviction.
• Notwithstanding the lack of trading conviction today, the week has been accented with ample buying interest driven by pleasing inflation reports (CPI, PPI, import-export prices)
• Yields have dropped between 19 and 23 basis points for maturities ranging from the 2-yr note to the 30-yr bond
• Rate cut expectations for 2024 are holding steady at two cuts, with September and December seen as the "go dates," according to CME FedWatch Tool
  • Probability of 25 basis points cut to 5.00-5.25% at September FOMC meeting is 69.2% versus 67.7% yesterday
  • Probability of 25 basis points cut to 4.75-5.00% at December FOMC meeting is 71.2% versus 70.8% yesterday
• Yield check:
  • 2-yr: unch at 4.69%
  • 3-yr: +1 bp to 4.44%
  • 5-yr: unch at 4.24%
  • 10-yr: -2 bps to 4.22%
  • 30-yr: -5 bps to 4.35%