Bond Market Update

Curve Steepening

• Treasuries have settled down some after getting riled up a bit in the wake of today's data that showed the Philadelphia Fed Index returning to expansion mode in September and initial jobless claims for the week ending September 14 coming in at a low 219,000 (a level well below anything one would typically see in a recession).
• There has been some added curve steepening with longer rates pushing higher while short rates key on the Fed's aggressive rate cut and median estimates for another 150 basis points of easing between now and the end of 2025.
• Long rates are being sparked, too, by some lingering worries that inflation might not improve as the Fed thinks it will, particularly if growth holds up better than expected because of the rate cuts.
• Yield check:
  • 2-yr: +1 bp to 3.61%
  • 3-yr: +2 bps to 3.49%
  • 5-yr: +4 bps to 3.51%
  • 10-yr: +5 bps to 3.74%
  • 30-yr: +6 bps to 4.07%