Bond Market Update

Bessent Speaks

• Treasury yields remain elevated in a curve-flattening trade as the June employment report squashed rising expectations for a possible rate cut at the July FOMC meeting. The probability of a 25-basis point cut in July sits at just 4.7% now, versus 23.8% yesterday, according to the CME FedWatch Tool.
• Treasury Secretary Bessent, in a CNBC interview, said he doesn't agree with the CBO's growth projections when looking at the reconciliation bill, that he expects more trade deals but warns countries "should be careful" because tariff rates can go back to April 2 levels, and that tariffs have not hurt the economy.
• When asked if he would take the Fed Chair job if offered, he didn't say "no." All he said was that someone being Treasury Secretary and Fed Chair hasn't happened since the 1930s.
• The U.S. dollar has gotten a boost with the July rate cut probability fading away. The U.S. Dollar Index is up 0.4% to 97.13.
• Yield check:
  • 2-yr: +8 bps to 3.87%
  • 3-yr: +6 bps to 3.83%
  • 5-yr: +5 bps to 3.92%
  • 10-yr: +4 bps to 4.33%
  • 30-yr: +3 bps to 4.85%