Bond Market Update

Long End Maintains Lead

• U.S. Treasuries continue holding gains with 10s and 30s sitting just below highs that were reached during the last hour while 5s and 2s have dipped back to their opening levels after the New York Fed released its Survey of Consumer Expectations for August, showing an uptick in year-ahead inflation expectations to 3.2% from 3.1% while three-year and five-year expectations remained at 3.0% and 2.9%, respectively. With employment being in focus as of late, it is worth noting that the Survey also showed that the mean perceived probability of finding a job in the event of a sudden job loss dropped by 5.8 percentage points to 44.9%, a record low for the series that started in mid-2013. This serves as another signal of growing softness in the labor market, which is expected to trigger a rate cut from the FOMC.
• Yield Check:
  • 2-yr: -1 bp to 3.50%
  • 3-yr: -1 bp to 3.47%
  • 5-yr: -1 bp to 3.58%
  • 10-yr: -3 bps to 4.06%
  • 30-yr: -6 bps to 4.71%