Bond Market Update

Data Recon

• Nonfarm payrolls increased by a smaller-than-expected 114,000 in July, the unemployment rate increased to 4.3% from 4.1%, the U-6 unemployment rate, which also accounts for underemployed workers, rose to 7.8% from 7.4%, and average hourly earnings growth on a year-over-year basis decelerated to 3.6% from 3.8%, which isn't a lot of disposable spending breathing room above the 3.0% CPI rate for June.
  • The key takeaway from the report is that it is an economic slowdown signal. How much of a slowdown will avail itself in coming months, but in the context of a market newly worried about a hard landing and the Fed making a policy mistake by keeping rates higher for longer, this report will not assuage those concerns.
• Yield Check:
  • 2-yr: -21 bps to 3.94%
  • 3-yr: -20 bps to 3.77%
  • 5-yr: -16 bps to 3.68%
  • 10-yr: -12 bps to 3.86%
  • 30-yr: -9 bps to 4.18%