Bond Market Update

Defending Friday Gains

• Recent action saw the long bond rise to a fresh session high while shorter tenors have also seen some buying but they remain below their best levels from the morning. Intraday action has been uneventful, as the market defends its strong gains from Friday. Expectations for a September rate cut soared on Friday and they have increased a bit more today with the fed funds futures market now pointing to an 87.8% implied likelihood of a cut on September 17, up from 80.3% on Friday and 64.0% a month ago. Equities have continued their rebound off two-week lows with the S&P 500 (+1.4%) recovering the bulk of its loss from Friday.
• Yield Check:
  • 2-yr: UNCH at 3.70%
  • 3-yr: -1 bp to 3.66%
  • 5-yr: -1 bp to 3.76%
  • 10-yr: -1 bp to 4.21%
  • 30-yr: -1 bp to 4.80%