Bond Market Update

Rate Cut Expectations Rising

• Recent action saw the long bond inch back to its session high that was notched in immediate reaction to the drop in July job openings while shorter tenors remain just below their best levels of the day. The market has held onto its gains while equities have had a sloppy morning that has seen the S&P 500 (unch) alternate between a slim loss and a slim gain. It is worth noting that rate cut expectations have been on the rise with the market now seeing a 43.0% implied likelihood of a 50-bps cut on September 18, up from 38.0% that was seen yesterday.
• Yield Check:
  • 2-yr: -10 bps to 3.79%
  • 3-yr: -8 bps to 3.66%
  • 5-yr: -7 bps to 3.58%
  • 10-yr: -6 bps to 3.78%
  • 30-yr: -5 bps to 4.08%