Bond Market Update

Longer Tenors Backtrack

• Longer-dated U.S. Treasuries have seen some backtracking in recent action, though the entire complex continues trading in the green, making for a shallow bounce from yesterday's dip that lifted the 30-yr yield to its highest level since November 2023 while the 10-yr yield revisited its high from last year (4.739%). Today's overall activity has been greatly reduced, which had been expected, but the market is likely to see some volatility to end the week given the looming release of the Employment Situation report for December (Briefing.com consensus 154,000; prior 227,000). That report could influence the market's rate cut expectations for May, considering they are still close to a toss-up with the CME FedWatch tool pointing to a 55.2% implied likelihood of a 25-basis point cut on May 7, up from 51.3% yesterday but down from 60.3% that was seen a week ago.
• Yield Check:
  • 2-yr: -3 bps to 4.26%
  • 3-yr: -2 bps to 4.34%
  • 5-yr: -2 bps to 4.45%
  • 10-yr: -1 bp to 4.68%
  • 30-yr: -1 bp to 4.92%