Bond Market Update

Soft Start Reversed

• U.S. Treasuries have recovered swiftly from their opening losses with the long end maintaining its early outperformance. The first hour of trade saw some bumpy action with Treasuries testing their early lows, but the market bounced alongside a weak open in equities, rising to session highs after the just-released ISM Manufacturing PMI for February (50.3%; Briefing.com consensus 50.7%; prior 50.9%) showed a larger-than-expected deceleration in activity. This release contrasted with the final February Manufacturing PMI from S&P Global, which showed an uptick to 52.7 from 51.6 in the flash estimate and 51.2 in the final January reading. The early bid is putting yields on 2s and 5s on track for their lowest settlement since late October while yields on longer tenors are approaching their lows from December.
• Yield Check:
  • 2-yr: +1 bp to 4.01%
  • 3-yr: UNCH at 3.98%
  • 5-yr: -1 bp to 4.01%
  • 10-yr: -3 bps to 4.20%
  • 30-yr: -3 bps to 4.48%