Bond Market Update

Data Recon

• Q2 productivity increased 2.4% (Briefing.com consensus: 2.2%) following a downwardly revised 1.8% decline (from -1.5%) in Q1. Unit labor costs rose 1.6% (Briefing.com consensus: 1.5%) following an upwardly revised 6.9% (from 6.6%) in Q1. From the same quarter a year ago, nonfarm business sector labor productivity was up 1.3%.
  • The key takeaway from the report is that productivity improved noticeably from the first quarter, helping to tamp down unit labor costs. The 1.8% annualized rate of productivity growth in the current business cycle (starting Q4 2019), though, is still below the long-term rate of 2.1% since the first quarter of 1947.
• Initial jobless claims for the week ending August 2 increased by 7,000 to 226,000 (Briefing.com consensus: 220,000). Continuing jobless claims for the week ending July 26 increased by 38,000 to 1.974 million, which is the highest level since November 6, 2021.
  • The key takeaway from the report, in light of the soft nonfarm payrolls data seen last week, is the jump in continuing jobless claims, which will be seen as a sign/symptom of a softening labor market.
• Yield Check:
  • 2-yr: +2 bps to 3.72%
  • 3-yr: +1 bp to 3.67%
  • 5-yr: +1 bp to 3.77%
  • 10-yr: +1 bp to 4.23%
  • 30-yr: -1 bp to 4.80%