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Labor Data Fuels Debate Over Pace of Fed Cuts

Markets shed risk on weak labor results. UST yields fluctuated throughout the morning and afternoon after data showed labor market contraction in August and following Fed Governor Waller’s comments which were interpreted as supportive of a larger, 50bp cut in September. The policy sensitive 2-year yield ended the day ~10bps lower at ~3.65%, while the 10-year
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Private Sector Hiring Sends Another Sign of Labor Weakness

Rates fall slightly ahead of crucial labor data. The short end of the rate/yield curve opened 5bps lower today after ADP employment showed further signs of slowed hiring. However, rates reversed course and hit session highs after ISM Services figures were higher than expected, coming in at 54.6 versus 54.0 expected. Ultimately, rates gradually declined throughout
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Initial Data Show More Labor Market Cracks

Rates plummet as labor market shows further signs of deterioration. Swap rates declined dramatically after JOLTS job openings were well below the 8.1mm estimate. The data is another signal that the labor market is weakening, a troubling sign ahead of Friday’s nonfarm payrolls and unemployment rate releases. Rates fell 7-11bps across a bull steepening curve,
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Equities Suffer Worst Setback Since August 5th Panic

September commences with a risk-off session. Weak US manufacturing data and Nvidia’s continued decline powered a rally for Treasurys and a broader equity sell-off. Swap rates and Treasury yields dropped 5-8bps on increased demand for safe haven assets. Meanwhile, the VIX “fear gauge” index spiked over 33% to ~21.0 while the NASDAQ led major stock
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Inflation Continues to Moderate in July

Rates rise on PCE day. Personal consumption expenditures (PCE) data was largely in-line with forecasts as the lone deviation was a slightly lower than expected core print. Rates rose 2-6bps despite the minor downside surprise, closing the month 25-50bps lower across a steepening curve. Rates were volatile throughout August, largely fueled by a fluttering labor market
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The Fed’s Preferred Inflation Gauge is Expected to Rise in July

Rates trade within a tight range ahead of inflation day. Rates closed little changed today despite GDP and personal consumption expenditures (PCE) price index data that could have spurred a volatile session. Rates rose 2-3bps across the curve, ending the day ~5bps above session lows. Attention is now geared toward tomorrow’s broader PCE slate, where
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More News Out of Japan While Markets Await US Data

Rates close nearly flat ahead of GDP, PCE data. The front end of the yield curve fell ~3bps while the belly and long end rose 1-2bps. Most of the price action occurred overnight as the 2-year yield opened ~3bps lower before trading within a ~3bp range the remainder of the session. Tomorrow’s session should be more
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2-Year Treasury Yields Decline ~4bps

Short end of the yield curve falls on strong auction demand. 2-year Treasury yields closed 4bps lower today, reversing a 3bp rise early in the trading session. The move was largely attributed to strong demand at a $69B sale of 2-year Treasury notes and weaker than expected Richmond manufacturing (-19 vs. -14 expected), both of
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Markets Await Upcoming Economic Data

Rates rise slightly ahead of a busy week. Swap rates rose 1-2bps across the curve today in a quieter rates session. Higher than expected durable goods orders in July (9.9% versus 5.0% expected and -6.9% in June) did little to sway rates, as the ~3bp decline in the data’s aftermath was offset by a gradual rise
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Powell Says the “Time Has Come” for Rate Cuts

Rates plummet as Powell backs monetary easing. Swap rates declined 3-9bps across a steepening curve after Chair Powell indicated today that rate cuts should be set to commence in September. The policy-sensitive 2-year Treasury yield fell over 9bps to 3.91% as markets have honed in on either a 25bp or 50bp initial rate cut. Equities
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