Core Viewpoint - US Treasury bonds weakened after initial jobless claims and continuing claims data came in below expectations, leading to a flattening of the yield curve [1][3] Group 1: Yield Movements - The entire yield curve rose by 3 to 5 basis points after 3 PM ET, with the middle of the curve leading the decline [1][3] - The 10-year Treasury yield closed at approximately 4.105%, up 4 basis points on the day [4][6] - The 5s30s spread narrowed by nearly 2 basis points, reversing the steepening trend observed on Wednesday [1][3] Group 2: Economic Indicators - The majority of the decline in bond prices occurred following the release of weekly jobless claims data, which initially triggered price volatility [5] - The overnight index swap (OIS) related to the federal funds rate expectations remained stable for the December meeting, implying a rate cut of about 22 basis points [5] - The longer end of the curve indicates an expected cumulative rate cut of approximately 60 basis points by the June meeting next year, although traders are betting on a deeper rate cut path in SOFR options [5] Group 3: Current Yield Rates - As of 3 PM ET, the yield rates were as follows: - 2-year Treasury yield at 3.5288% - 5-year Treasury yield at 3.6832% - 10-year Treasury yield at 4.1098% - 30-year Treasury yield at 4.7667% [2][6] Group 4: Yield Spreads - The spread between the 5-year and 30-year Treasury yields was reported at 108.17 basis points - The spread between the 2-year and 10-year Treasury yields was reported at 57.68 basis points [7]

Core Viewpoint - The article discusses a significant technical failure at the Chicago Mercantile Exchange (CME) that disrupted trading for approximately 10 hours, affecting various financial markets and raising concerns among traders about month-end operations [3][4]. Group 1: Technical Failure Impact - CME experienced a technical glitch that halted trading, particularly impacting the Globex futures and options market, which accounts for 90% of CME's trading volume [3]. - The failure led to low trading volumes, with notable delays in trading for Treasury futures and options linked to the secured overnight financing rate [3]. - The disruption resulted in widened bid-ask spreads for Treasury futures, with 20-year futures showing a spread of 11 ticks and 30-year futures showing a spread of 7 ticks [4]. Group 2: Market Reactions and Predictions - Despite the technical issues, the stock market remained stable, with an expected $6 billion inflow into equities for the month-end rebalancing [3]. - Market participants expressed concerns about the inability to trade contracts tracking the S&P 500 and other assets due to the outage, which was attributed to a cooling issue at a key data center in the Chicago area [5][6]. - As trading resumed, the bond yield curve exhibited a "bear steepener" trend, indicating rising yields [5].

Core Insights - CME experienced a technical failure that disrupted trading for approximately 10 hours, affecting multiple financial markets in Asia and Europe [1][2] - The Globex futures and options market, which accounts for 90% of CME's trading volume, resumed operations at 8:30 AM ET [1] - Despite the resumption, trading volumes remained low, particularly in Treasury futures and options linked to overnight financing rates [1] Group 1: Market Impact - Concerns arose regarding month-end operations due to the CME outage, but Treasury futures successfully opened at 8:30 AM ET [1] - The anticipated rebalancing was expected to bring about $6 billion inflow into equities, yet the stock market remained stable [1] - The technical issues led to wider bid-ask spreads in Treasury futures, with 20-year futures showing a 11 tick spread and 30-year futures a 7 tick spread [1] Group 2: Market Sentiment and Predictions - Bloomberg's WIRP data indicated a significant deviation in the pricing of December rate cuts, with OIS and Eurodollar futures showing probabilities of -88% and -83% respectively [2] - Despite the market's recovery, there was no observed corresponding trading flow, leaving the reasons for the discrepancies unclear [2] - The outage duration was three times longer than a similar incident in 2019, highlighting the critical role of CME and its Globex electronic trading platform [2]

Core Insights - The June employment data significantly exceeded expectations, with non-farm employment growth far surpassing predictions and an unexpected decline in the unemployment rate [1] - The market reacted swiftly, leading to a sharp drop in Treasury prices, a surge in overnight index swap (OIS) rates, and a collapse in secured overnight financing rate (SOFR) futures, resulting in a "bear flattening" of the yield curve [1] - The probability of a rate cut in July plummeted from 25% to 4% following the data release, indicating a strong labor market that supports the Federal Reserve's decision to maintain interest rates [1] Employment Data Analysis - State and local government jobs increased by 73,000, primarily in the education sector, while federal government jobs decreased by 7,000 [1] - Private sector employment growth was below expectations, yet the overall labor market remains robust, providing sufficient justification for the Federal Reserve to keep rates unchanged [1]