Bond Market Update

Data Recon

• Nonfarm business sector labor productivity increased 2.8% in the fourth quarter (Briefing.com consensus: 4.0%) following an upwardly revised 5.2% (from 4.9%) in the third quarter. Unit labor costs jumped 2.8% in the fourth quarter (Briefing.com consensus: 0.2%) on the heels of an upwardly revised 1.8% decline (from -1.9%) in the third quarter.
  • The key takeaway from the report is that the productivity increase itself was pretty solid, yet that consideration was offset by the comparable jump in unit labor costs that aren't going to help ease concerns about sticky inflation pressures.
• Relatedly, import prices rose 0.2% month-over-month but were down 0.1% year-over-year. Excluding fuel, import prices were up 0.5% month-over-month and were up 1.2% year-over-year. Export prices, meanwhile, climbed 0.6% month-over-month in January and were up 2.6% year-over-year. Nonagricultural export prices increased 0.7% month-over-month and were up 2.7% year-over-year.
• Initial jobless claims were unchanged at 213,000 for the week ending February 28. Continuing jobless claims increased 46,000 to 1.868 million for the week ending February 21.
  • The key takeaway from the report will be the continuing low level of initial jobless claims, which connotes a labor market that is slow to fire employees.
• Yield Check:
  • 2-yr: +5 bps to 3.59%
  • 3-yr: +6 bps to 3.61%
  • 5-yr: +7 bps it 3.74%
  • 10-yr: +6 bps to 4.14%
  • 30-yr: +5 bps to 4.76%