Bond Market Update

Dollar weakness

• There hasn't been a great deal of conviction in the Treasury trade today, although buyers have maintained a slight edge.
• Following this morning's economic data, there is a 25.5% probability of a 50-basis points rate cut at the September FOMC meeting, versus 25.0% yesterday, so no real change in that outlook, according to the CME FedWatch Tool.
• The fed funds futures market remains locked in on a 25-basis points rate cut at the September meeting. Next Friday Fed Chair Powell will be giving a speech on the Economic Outlook at the Jackson Hole Economic Symposium. Many participants are expecting him to pay some lip service to the idea of the Fed cutting rates in September.
• The U.S. Dollar Index is down 0.4% today to 102.57, as both the euro and the yen are showing some strength against the greenback.
• Yield check:
  • 2-yr: -4 bps to 4.06%
  • 3-yr: -4 bps to 3.87%
  • 5-yr: -4 bps to 3.76%
  • 10-yr: -4 bps to 3.89%
  • 30-yr: -4 bps to 4.18%