Immigration Surge Alters Treasury Market’s Reaction Function

The keen among you have likely noticed the disparity between recent declines in US yields and very robust GDP tracking for Q2. It's early yet, but the Atlanta Fed's GDPNow tracker stood at 4.2% as of the latest update. And yet, benchmark US bond yields are ~20bps off the YTD highs achieved late last month. The simplest explanation is that what matters for rates isn't any "nowcast," but rather visible softening in the labor market (e.g., undershoots on NFP and AHE), contraction-territory ISM he