Bond Market Update

Fresh Lows Set

• U.S. Treasuries trade on their lows with longer tenors showing relative weakness. The market opened the day in mixed fashion with the 5-yr note and shorter tenors showing gains while 10s and 30s started in the red, but the entire complex has retreated in recent trade. Economic data released this morning showed a much larger-than-expected trade deficit for January (-$131.4 bln; Briefing.com consensus -$93.5 bln), a larger-than-expected decrease in weekly jobless claims (to 221,000 from 242,000; Briefing.com consensus 234,000), and a welcome combination of an upward revision to Q4 productivity (to 1.5% from 1.2%; Briefing.com consensus 1.2%) coupled with a downward revision to Q4 unit labor costs (to 2.2% from 3.0%; Briefing.com consensus 3.0%). Equities are off to a weak start with the S&P 500 (-0.9%) widening this week's loss to 2.8%.
• Yield Check:
  • 2-yr: +1 bp to 4.00%
  • 3-yr: +2 bps to 4.01%
  • 5-yr: +4 bps to 4.10%
  • 10-yr: +6 bps to 4.32%
  • 30-yr: +5 bps to 4.61%