Good Thursday AM from your Hometown Lender,
Unemployment claims are higher today, Challenger Job cuts are higher, and non-farm productivity is weaker. Despite this all data being bond friendly, the bond market paring back some of the recent gains. Why? Well no one wants to be in front of tomorrow’s BLS jobs report and I would recommend the same.
Lock and don’t float into a big news event.
Yesterday saw 10yr Treasury yields break through technical resistance and move to the lowest level of the year, helped by ISM data coming in much weaker than expected as well as comments from Bessent.
It has held that level into today, which is a big green flag.
New Treasury Secretary Scott Bessent came out yesterday on an interview with Fox Business saying that the Trump administration’s will focus on bringing down the 10yr Treasury yield rather than trying to influence the Fed to further cut its policy rate. Bessent recognizes that the 10yr is the key to bringing down mortgage rates and other key borrowing rates.
Although Bessent didn’t go deeper on details, the Treasury can influence yields through deciding which maturities to issue, and the government can influence yields by cutting the deficit and borrowing less. Bessent has given no indication that he would look for the Fed to start buying more debt again (quantitative easing), which is also a way to manipulate lower yields.
