Bond Market Update

Early Losses Widened

• U.S. Treasuries trade on their lows after widening their initial losses in reaction to the December ISM Services report, which showed a big jump in the Prices Index (to 64.4 from 58.2) and an uptick in job openings for November (to 8.098 mln from 7.839 mln). The combination of rising prices and increasing willingness to hire is exerting some pressure on expectations for the next rate cut from the FOMC, explaining the post-data weakness in Treasuries. Equities started the day in positive territory, but slipped into the red after the data with the S&P 500 (-0.4%) staying a bit ahead of the Nasdaq (-0.8%).
• Yield Check:
  • 2-yr: +4 bps to 4.31%
  • 3-yr: +7 bps to 4.38%
  • 5-yr: +6 bps to 4.48%
  • 10-yr: +7 bps to 4.69%
  • 30-yr: +7 bps to 4.91%