Bond Market Update

Fuel on the Fire

• Some fuel got poured on the fire that was lit by the strong S&P Global Manufacturing and Services PMI reports for September when Fed Governor Barr (FOMC voter), right around the time the PMI data were released, delivered a speech in which he said further policy adjustments are likely to be needed.
• The probability of a 25-basis point rate hike to 4.00-4.25% at the October FOMC meeting has increased to 68.6% from 55.4% yesterday.
• Yields spiked on the PMI reports and have kept going.
• Yield check:
  • 2-yr: +12 bps to 4.87%
  • 3-yr: +11 bps to 4.93%
  • 5-yr: +11 bps to 4.95%
  • 10-yr: +10 bps to 5.07%
  • 30-yr: +7 bps to 5.37%