Reply To: Bond Traders Weekly Outlook: Continued Under Performance By 2-yr Note


Treasury yields moved noticeably higher following the data releases.

Q4 productivity was revised down to 1.7% (consensus 2.5%) from the preliminary estimate of 3.0%. Unit labor costs, meanwhile, were revised up to 3.2% ( consensus 1.4%) from 1.1%.

The key takeaway from the report is the elevated unit labor costs, which were up 6.3% from the same quarter a year ago (which is when the Fed first started raising rates). Moreover, unit labor costs in the nonfarm business sector were up 6.5% in 2022, which is the largest annual increase since 1982.

The 2-yr note yield is up four basis points to 4.94% and the 10-yr note yield is up seven basis points to 4.07%.

2-yr: +4 bps to 4.94%
3-yr: +4 bps to 4.66%
5-yr: +8 bps to 4.34%
10-yr: +8 bps to 4.07%
30-yr: +8 bps to 4.03%