Bond Market Update

Short End Behind

• U.S. Treasuries have retreated from their intraday highs, lifting yields on the 5-yr note and shorter tenors toward their highest levels of the day while the 30-yr yield is a bit closer to its pre-NFP level. The strong December jobs report has caused participants to reconsider their rate cut expectations. In fact, Bank of America published a note, saying that it does not expect additional easing from the FOMC. The fed funds futures market, however, still expects one more rate cut to be made in June. Equities are climbing off their lows, but the S&P 500 remains down 1.1%, which puts the index on track for a 1.5% loss for the week.
• Yield Check:
  • 2-yr: +10 bps to 4.37%
  • 3-yr: +12 bps to 4.46%
  • 5-yr: +10 bps to 4.57%
  • 10-yr: +7 bps to 4.76%
  • 30-yr: +3 bps to 4.96%