Bond Market Update

Morning Highs Revisited

• Recent action saw the 2-yr note climb above its high that was reached in immediate reaction to the weak jobs report for February while longer tenors have also seen some recent buying, which puts them not far below their morning highs. Today's session has proven to be a volatile affair with the entire complex swinging between losses and gains as the market ponders the implications of the weak jobs report, which showed an unexpected elimination of 92,000 nonfarm payrolls in February. On its own, the report could be used as an argument for pulling forward the next rate cut from the FOMC, but the inflationary implications of this week's jump in the price of oil throw a monkey wrench into the rate cut argument. The fed funds futures market is now back to thinking that the next rate cut will be announced in July with another cut expected in December.
• Yield Check:
  • 2-yr: -8 bps to 3.52%
  • 3-yr: -7 bps to 3.55%
  • 5-yr: -5 bps to 3.69%
  • 10-yr: -3 bps to 4.12%
  • 30-yr: UNCH at 4.75%