Bond Market Update

Long End Leads

• U.S. Treasuries have risen to fresh highs with longer tenors remaining at the forefront of the advance while the short end lags, though the 2-yr note is now higher on the day. Treasuries retreated from their starting levels during the initial 30 minutes of action, but climbed back to those levels during the next 30 minutes. More recent trade has seen a rise to fresh highs after the market received the ISM Manufacturing PMI (50.9%; Briefing.com consensus 49.1%; prior 49.2%) for January, which showed an unexpected return to expansion in the manufacturing sector. Meanwhile, the Construction Spending report for December (0.5%; Briefing.com consensus 0.2%; prior 0.2%) showed a larger than expected growth in activity. Equities are off to a weak start as they respond to tariff news. The S&P 500 (-1.8%) is faring a bit better than the Nasdaq (-2.4%) in the early going.
• Yield Check:
  • 2-yr: -2 bps to 4.22%
  • 3-yr: -4 bps to 4.24%
  • 5-yr: -7 bps to 4.29%
  • 10-yr: -10 bps to 4.47%
  • 30-yr: -11 bps to 4.71%