Bond Market Update

Early Gains Narrowed

• U.S. Treasuries have backed down from highs that were reached around 10:00 ET, but the entire complex remains in positive territory. The long bond showed some relative weakness earlier, and it remains behind, which leaves its yield just one basis point below yesterday's closing level. Shorter tenors, however, are holding onto bigger chunks of their early gains. Today's release of a disappointing ADP Employment Change report has essentially cemented the market's expectations for 25-basis point rate cuts in October and December and the market has started entertaining the potential for a 50-basis point cut at one of these meetings, though that probability is just a lowly 1.0%. Equities have overcome their weak start with the S&P 500 (+0.1%) turning positive about an hour ago.
• Yield Check:
  • 2-yr: -4 bps to 3.56%
  • 3-yr: -4 bps to 3.57%
  • 5-yr: -3 bps to 3.70%
  • 10-yr: -3 bps to 4.12%
  • 30-yr: -1 bp to 4.72%