Bond Market Update

Data Recon

• Personal income increased 0.6% month-over-month in October (Briefing.com consensus 0.3%) following an unrevised 0.3% increase in September. Personal spending increased 0.4% (Briefing.com consensus 0.2%) following an upwardly revised 0.6% increase (from 0.5%) in September. The PCE Price Index was up 0.2%, as expected, and up 2.3% year-over-year versus 2.1% in September. The core PCE Price Index, which excludes food and energy, was up 0.3%, as expected, and up 2.8% year-over-year versus 2.7% in September.
  • The key takeaway from the report is the absence of disinflation in the PCE price indexes on a year-over-year basis. That wasn't necessarily a surprise given that the monthly readings were in-line with estimates, yet it will keep the Fed inclined to take a more gradual approach to cutting the target range for the fed funds rate.
• Yield Check:
  • 2-yr: -2 bps to 4.23%
  • 3-yr: -4 bps to 4.18%
  • 5-yr: -5 bps to 4.14%
  • 10-yr: -3 bps to 4.27%
  • 30-yr: -3 bps to 4.45%