Bond Market Update

Data Recon

• The December Chicago PMI checked in at a lowly 36.9 (Briefing.com consensus 42.7) versus 40.2 in November. This is the lowest reading since May. The dividing line between expansion and contraction is 50.0, so the December reading connotes an acceleration in the pace of contraction for manufacturing activity in the Chicago Fed region.
• The November Pending Home Sales index increased 2.2% month-over-month (Briefing.com consensus 0.9%) versus a downwardly revised 1.8% (from 2.0%) for October.
• Stocks continue to struggle, falling victim to continued profit-taking into year end (Russell 2000 -1.6%; DJIA -1.6%; Nasdaq -1.6%; and S&P 500 -1.5%).
• Yield check:
  • 2-yr: -7 bps to 4.26%
  • 3-yr: -8 bps to 4.29%
  • 5-yr: -9 bps to 4.37%
  • 10-yr: -7 bps to 4.55%
  • 30-yr: -5 bps to 4.76%