Bond Market Update

Data Recon

• U.S. Treasuries are on the rise with shorter tenors leading the way after the market learned that 23,000 nonfarm payrolls were lost in July (Briefing.com consensus 86,000) while average hourly earnings growth slowed to 0.1% (Briefing.com consensus 0.3%).
• The July employment report falls into the domain of "bad news is good news." Participants are recognizing that nonfarm payroll growth was weak (actually, there was no growth), that wage inflation disinflated, and that the labor force participation rate continues to dwindle.
  • The key takeaway from the report is that it was soft enough, presumably, to keep Fed officials in a wait-and-see mode, such that they could see a better case now for not raising the target range for the fed funds rate at the September FOMC meeting.
• Yield Check:
  • 2-yr: -9 bps to 4.16%
  • 3-yr: -8 bps to 4.22%
  • 5-yr: -8 bps to 4.31%
  • 10-yr: -7 bps to 4.60%
  • 30-yr: -4 bps to 5.17%