Bond Market Update

Data Recon

• The ADP Employment Change Report for July showed private sector employment increasing by 104,000 (Briefing.com consensus: 78,000) following an upwardly revised decline of 23,000 (from -33,000) in June.
  • The key takeaway is that, while the overall employment growth was modest, it was broad-based with gains for small, medium, and large establishments. In brief, it was not a report that signals any material weakness in the labor market.
• The Advance Q2 GDP report showed real GDP increasing at an annual rate of 3.0% (Briefing.com consensus: 2.5%) following a 0.5% decline for the first quarter. The GDP Deflator increased 2.0% (Briefing.com consensus: 2.6%) following a 3.8% increase in the first quarter.
  • The key takeaway from the report is the recognition that the stronger growth was fueled by the decrease in imports (-30.3%), which are a subtraction in the calculation of GDP. The net exports component contributed 4.99 percentage points to Q2 GDP growth.
• Yield Check:
  • 2-yr: +2 bps to 3.90%
  • 3-yr: +3 bps to 3.85%
  • 5-yr: +4 bps to 3.94%
  • 10-yr: +3 bps to 4.36%
  • 30-yr: +2 bps to 4.89%