Bond Market Update

Gains Narrowed

• Recent action saw some backtracking that has returned the long bond to little changed while the 10-yr note is also approaching its flat line. Up front, the 2-yr note remains in positive territory, hanging onto roughly half of today's gain. Fed Governor Waller (FOMC voter) spoke after the release of the August jobs report, saying that he supports cutting the fed funds rate range at the September meeting. The fed funds futures market agrees that a rate cut will be made in a couple weeks, but it now sees just a 23.0% implied likelihood of a 50-bps decrease, down considerably from yesterday's 40.0%. Equities are facing continued pressure with the S&P 500 (-1.8%) and Nasdaq (-2.6%) now down a respective 4.3% and 5.9% for the week.
• Yield Check:
  • 2-yr: -6 bps to 3.69%
  • 3-yr: -5 bps to 3.57%
  • 5-yr: -2 bps to 3.52%
  • 10-yr: -1 bp to 3.72%
  • 30-yr: UNCH at 4.02%