Bond Market Update

Data Recon

• Payroll growth was somewhat anemic in August (additional revisions for June payrolls produced job losses that month); the U-6 unemployment rate, which accounts for unemployed and underemployed workers, jumped to 8.1% from 7.9%; the number of workers unemployed for 27 weeks or more accounted for 25.7% of the unemployed versus 24.9% in July; manufacturing sector payrolls declined by 12,000; and average hourly earnings growth decelerated on a year-over-year basis.
  • The key takeaway is that the overall report leaned to the softer side of things, which isn't great economically speaking, yet, because it leaned that way, it also fortified the market's belief that there will be a rate cut at the September FOMC meeting and its hope that there will be additional rate cuts at the October and December FOMC meetings—a view that is supportive for a market pining for rate cuts.
• Yield Check:
  • 2-yr: -11 bps to 3.48%
  • 3-yr: -11 bps to 3.44%
  • 5-yr: -11 bps to 3.55%
  • 10-yr: -10 bps to 4.08%
  • 30-yr: -8 bps to 4.79%