Bond Market Update

Early Gains Defended

• U.S. Treasuries remain just above their flat lines after a quiet start to the Friday session. The market followed its higher open with some early backtracking, but the pressure abated as soon as the complex dipped into negative territory. Longer tenors outperformed in the overnight futures market, but the short end has taken the lead during the recent rebound while the 30-yr bond remains much closer to its low. Flash January PMI readings did not offer any surprises with Manufacturing PMI (51.9; prior 51.8) showing a slight uptick from December while Services PMI (52.5; prior 52.5) was unchanged. Reported not long ago, the final reading of the University of Michigan's Consumer Sentiment rose to 56.4 (Briefing.com consensus 54.0) from 54.0 in the preliminary reading. Equities are off to a flat start in the S&P 500 while the Dow (-0.5%) and Russell 2000 (-0.7%) underperform.
• Yield Check:
  • 2-yr: -1 bp to 3.60%
  • 3-yr: -1 bp to 3.67%
  • 5-yr: -1 bp to 3.84%
  • 10-yr: -1 bp to 4.24%
  • 30-yr: -1 bp to 4.83%