Bond Market Update

Short End Maintains Lead

• U.S. Treasuries trade on their highs with shorter tenors maintaining their strong lead after today's release of a disappointing jobs report and a weak ISM Manufacturing Index for July. The 2-yr yield finished yesterday just shy of its July high, but today's rally has sent the 2-yr yield back to within a couple basis points of its low from July 1 (3.69%). Yields on longer tenors are also nearing their lows from the start of July after today's data fueled a resurgence in expectations for a September rate cut. The fed funds futures market now sees an 82.8% implied likelihood of a cut on September 17, up from yesterday's 37.7%.
• Yield Check:
  • 2-yr: -23 bps to 3.72%
  • 3-yr: -20 bps to 3.69%
  • 5-yr: -17 bps to 3.79%
  • 10-yr: -13 bps to 4.23%
  • 30-yr: -7 bps to 4.81%