Bond Market Update

Data Recon

• Q4 productivity was revised down to 1.8% (Briefing.com consensus: 2.5%) from the preliminary estimate of 2.8%, while unit labor costs were revised up to 4.4% (Briefing.com consensus: 3.1%) from the preliminary estimate of 2.8%.
  • The key takeaway from the report is the dichotomy of lower productivity and higher unit labor costs, the latter of which will contribute to the Fed's reticence to cut rates soon (even though this is a dated report).
• Yield Check:
  • 2-yr: +6 bps to 3.89%
  • 3-yr: +6 bps to 3.90%
  • 5-yr: +6 bps to 4.01%
  • 10-yr: +6 bps to 4.39%
  • 30-yr: +5 bps to 4.96%