Bond Market Update

Data Recon

• Nonfarm payrolls increased by just 57,000, while nonfarm private payrolls rose by just 49,000, driven by a 69,000 increase in private education and health services that was offset by a 61,000 decline in leisure and hospitality. Moreover, one can extrapolate that average hourly earnings struggled again to keep up with inflation. They were up 0.3% month-over-month in June, pitted against a 0.5% month-over-month increase in CPI inflation in May.
  • The key takeaway from the report for the market, which likes to see the good in the bad, is that the softer payrolls and pressure on real earnings should temper concerns about an imminent rate hike.
• Initial jobless claims for the week ending June 27 declined by 1,000 to 215,000 (Briefing.com consensus: 220,000). Continuing jobless claims for the week ending June 20 increased by 2,000 to 1.814 million.
  • The key takeaway from the report is that the low level of initial jobless claims continues to reinforce the understanding that layoff activity remains quite low overall.
• Yield Check:
  • 2-yr: -4 bps to 4.12%
  • 3-yr: -4 bps to 4.14%
  • 5-yr: -2 bps to 4.21%
  • 10-yr: -1 bp to 4.47%
  • 30-yr: +1 bp to 4.98%