Bond Market Update

Data Recon

• Total CPI increased 0.2% month-over-month in October (Briefing.com consensus 0.2%) while core CPI, which excludes food and energy, increased 0.3% month-over-month (Briefing.com consensus 0.3%). Those increases left total CPI up 2.6% year-over-year, versus 2.4% in September, and core CPI up 3.3%, unchanged from September.
  • The key takeaway from the report -- and perhaps calming influence -- is the understanding that the shelter index accounted for more than 65% of the total 12-month increase in core CPI, so the market is watering down the headline inflation print as not being as comprehensively inflationary as it seems. The unadjusted change in the all items less shelter index was just 1.3% year-over-year.
• Yield Check:
  • 2-yr: -8 bps to 4.26%
  • 3-yr: -9 bps to 4.22%
  • 5-yr: -6 bps to 4.25%
  • 10-yr: -5 bps to 4.38%
  • 30-yr: -3 bps to 4.54%