Bond Market Update

Narrow Range in Early Action

• U.S. Treasuries continue hovering near their starting levels with the long bond maintaining its early show of relative weakness. Shorter tenors have done a bit better since the cash start, lifting the 2-yr note into positive territory. The Personal Income/Outlays report for July was right in line with expectations, but that was sufficient for the market to keep its high hopes for a rate cut on September 17. The fed funds futures market points to an 89.2% implied likelihood of a cut in just over two weeks, up from yesterday's 86.7%. Equities are off to a lower start with the S&P 500 (-0.7%) turning negative for the week (-0.1%).
• Yield Check:
  • 2-yr: -2 bps to 3.62%
  • 3-yr: UNCH at 3.59%
  • 5-yr: +1 bp to 3.70%
  • 10-yr: +2 bps to 4.23%
  • 30-yr: +4 bps to 4.91%