Bond Market Update

Data Recon

• The Q2 Current Account Balance showed a stark narrowing in the deficit to $251.3 billion from an upwardly revised deficit of $439.8 billion (from -$450.2 billion) in Q1.
• The preliminary September S&P Global US Manufacturing PMI slipped to 52.0 from the final reading of 53.0 for August. The preliminary S&P Global US Services PMI dipped to 53.9 from the final reading of 54.5 for August. Both gauges remain above the 50.0 demarcation line for expansion and contraction, although activity in both cases decelerated slightly from August.
• Fed Governor Bowman delivered a speech that emphasized the need to take a proactive approach to setting policy and which emphasized her concerns about the downside risks to employment. Her position is that the Fed should focus on risks to its employment mandate and preemptively stabilize and support labor market conditions. One can infer, then, that her dot on the dot plot is in the realm of expecting two more rate cuts before year-end.
• President Trump will soon address the UN General Assembly.
• Yield check:
  • 2-yr: unch at 3.60%
  • 3-yr: unch at 3.58%
  • 5-yr: -1 bp to 3.69%
  • 10-yr: unch at 4.14%
  • 30-yr: unch at 4.76%