Bond Market Update

Changing Expectations

• Treasury yields are off their lows of the day, but not by much as buyers have been calling the shots so far today.
• The weaker economic data served as the primary catalyst, yet there could also be some safe-haven posturing around the edges with U.S. markets closed Monday for Presidents Day.
• Stocks are trading in mixed fashion. The S&P 500 moved higher at the open, but that advance got stopped just shy of the all-time high (6128.18) that was reached on January 24.
• The dollar is getting clipped pretty good today as the weaker retail sales data has moved the market's expectation for the next rate cut back to the June/July FOMC meetings from September/October following the CPI report.
  • EUR/USD +0.4% to 1.0508
  • USD/JPY -0.4% to 152.29
• Yield check:
  • 2-yr: -6 bps to 4.25%
  • 3-yr: -7 bps to 4.26%
  • 5-yr: -7 bps to 4.32%
  • 10-yr: -6 bps to 4.47%
  • 30-yr: -4 bps to 4.69%