Bond Market Update

Data Recon

• The trade deficit widened to $88.6 billion in July (Briefing.com consensus: -$89.6 billion) from an upwardly revised -$71.2 billion (from -$73.3 billion) in June, as imports were $10.8 billion more than June imports and exports were $6.6 billion less than June exports.
  • The key takeaway from the report is that the widening deficit will be a drag on Q3 GDP growth estimates. Q2 productivity was 1.4%, unchanged from the advance estimate and as expected.
• Unit labor costs, though, were revised down to 1.2% (Briefing.com consensus: 1.3%) from 1.3% in the advance estimate.
  • The key takeaway from the report is that the downtick in unit labor costs from the advance estimate helped keep inflation concerns in check.
• Initial jobless claims for the week ending August 29 increased by 2,000 to 206,000 (Briefing.com consensus: 205,000). Continuing jobless claims for the week ending August 22 increased by 8,000 to 1.779 million.
  • The key takeaway from the report is that the low level of initial jobless claims continues to connote a low-firing environment.
• Yield Check:
  • 2-yr: -8 bps to 4.31%
  • 3-yr: -7 bps to 4.38%
  • 5-yr: -7 bps to 4.49%
  • 10-yr: -6 bps to 4.74%
  • 30-yr: -4 bps to 5.23%