Bond Market Update

Data Recon

• The July ADP Employment Change Report showed 122,000 jobs were added to private-sector payrolls (Briefing.com consensus 160,000) following an upwardly revised 155,000 (from 150,000) in June. The 4.8% year-over-year gain for job-stayers was the slowest pace of growth in three years.
  • The key takeaway from the report is that it connotes a slowdown in private-sector hiring and pay, which is the right mix for furthering the market's belief that the Fed will cut rates in September.
• The second quarter Employment Cost Index showed compensation costs for civilian workers increased 0.9% (Briefing.com consensus 1.0%), seasonally adjusted, for the three-month period ending in June 2024 versus1.2% for the three-month period ending in March 2024.
  • The key takeaway is that there was a year-over-year moderation in wages and salaries and benefit costs that, again, trended in the right matter to suggest the Fed might be convinced to cut rates in September.
• Yield Check:
  • 2-yr: -2 bps to 4.34%
  • 3-yr: -2 bps to 4.15%
  • 5-yr: -3 bps to 4.01%
  • 10-yr: -3 bps to 4.12%
  • 30-yr: -3 bps to 4.37%