Bond Market Update

Data Recon

• Initial jobless claims for the week ending January 24 decreased by 1,000 to 209,000 (Briefing.com consensus: 205,000), while continuing jobless claims for the week ending January 17 decreased by 38,000 to 1.827 million, which is the lowest level since September 21, 2024.
  • The key takeaway from the report is that it corroborates the idea that labor market conditions are still reasonably good to promote solid consumer spending activity that will be supportive of ongoing economic growth and a Fed that can show more patience before cutting rates again.
• The revised Q3 productivity report didn't contain any new surprises or changes. The growth rate for Q3 productivity remained at an impressive 4.9% (Briefing.com consensus: 4.9%), while unit labor costs decreased 1.9% (Briefing.com consensus: -1.9%), unchanged from the advance report.
  • With no changes, the key takeaway remained the same: this productivity report is the golden ticket for the economy (and the Fed, per chance), as it reflects strong growth without labor cost inflation.
• There was a change in the trade deficit. It widened to $56.8 billion in November (Briefing.com consensus: -$43.5 billion) from an upwardly revised $29.2 billion (from -$29.4 billion) in October. Exports were $10.9 billion less than October exports, and imports were $16.8 billion more than October imports.
  • The key takeaway from the report is that it will create a drag on Q4 GDP growth expectations. A possible silver lining, though, is that the import activity could be construed as a reflection of increased demand in the U.S.
• Yield Check:
  • 2-yr: -1 bp to 3.57%
  • 3-yr: -1 bp to 3.64%
  • 5-yr: -1 bp to 3.83%
  • 10-yr: +1 bp to 4.26%
  • 30-yr: +2 bps to 4.88%