Bond Market Update

Data Recon

• The ISM Services PMI increased to 54.1% in December (Briefing.com consensus 53.0%) from 52.1% in November. The dividing line between expansion and contraction is 50.0%, so the December reading reflects services sector activity accelerating from November.
  • The key takeaway from the report is that it was a double-whammy for rate cut expectations in that the expansion in services sector activity accelerated while the prices index picked up noticeably, printing its first reading above 60.0% since January 2024.
• 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%