Bonds continued drifting gently higher in the over night session with 10yr yields simply barely edging above 4.50% before today’s big tasks report (the just calendar occasion of note before the vacation weekend). The reaction is completely affordable given the information results. The payroll count was weaker (57k vs 110k, with another -71 k of revisions) and bonds rallied instantly. If the 4-5bp rally in 10yr yields looks like less than you ‘d anticipate, turn your attention to 2 year yields which fell at a much quicker pace. This is a factor of its closer connection to the Fed Funds Rate (that makes sense if you consider “2 years” is closer to the duration of loans made at the Fed Funds Rate than “ten years”). From here, bond traders that stay at the desk will be considering exits at 2pm ET. Any staying volatility may be a simple factor of light trader participation. Log today as a success and wait for cost discovery next week.
Here’s a fun little chart that puts quarter-end volume and volatility into point of view relative to a tasks report reaction:
< img src="http://a.mbslive.net/assets/6a4661a58931e5f0d8159bf8/6a4661a58931e5f0d8159bf8.png" alt="20260702 open.png"/ >