Bond Market Update

Data Recon

• The January employment report, overall, was good when accounting for upward revisions to the prior two months, which added 100,000 to the change in nonfarm payrolls, the dip in the unemployment rate to 4.0% (from 4.1%), and the solid 0.5% increase in average hourly earnings. Also, benchmark revisions showed the total nonfarm payroll level for March 2024 was revised downward by 589,000 as opposed to 818,000 with the preliminary estimate seen in August.
  • The key takeaway from the report is that it is a good "economic" report as the jump in average hourly earnings on a nominal and real basis is a good portent for consumer spending. The question will be if it is a good "market" report given that the jump in average hourly earnings can be construed as a sticky inflation indicator that will forestall another rate cut by the Fed.
• Yield Check:
  • 2-yr: +3 bps to 4.26%
  • 3-yr: +5 bps to 4.29%
  • 5-yr: +7 bps to 4.34%
  • 10-yr: +6 bps to 4.50%
  • 30-yr: +5 bps to 4.70%