Bond Market Update

Data Recon

• Nonfarm payroll growth is slowing, checking in below 200,000 for the second straight month after revisions, but the unemployment rate, which fell to 3.5% in July, is in the realm of a 50-year low and is a beacon of full employment that will keep consumers spending along with the increase in real earnings.
  • The key takeaway from the report is that labor supply continues to be tight, which could make it difficult to achieve a more Fed-pleasing moderation in wage growth. That might not translate into another increase in the target range for the fed funds rate, but it does fit the notion that the Fed will be inclined to keep the policy rate higher for longer.
• Yield Check:
  • 2-yr: -3 bps to 4.87%
  • 3-yr: -3 bps to 4.55%
  • 5-yr: -4 bps to 4.26%
  • 10-yr: -3 bps to 4.16%
  • 30-yr: -3 bps to 4.27%