Bond Market Update

Data Recon

• U.S. Treasuries have risen off their opening levels with shorter tenors leading the bounce after the Personal Income/Outlays report showed below-consensus personal spending growth and a deceleration in the yr/yr core PCE.
• Personal income increased 0.5% month-over-month in May (Briefing.com consensus 0.4%) following a 0.3% increase in April and personal spending increased 0.2% month-over-month (Briefing.com consensus 0.3%) following a downwardly revised 0.1% increase (from 0.2%) in April. The PCE Price Index was unchanged on the heels of a 0.3% increase in April, leaving it up 2.6% year-over-year versus 2.7% in April. The core-PCE Price Index, which excludes food and energy, was up 0.1% month-over-month after a 0.3% increase in April, leaving it up 2.6% year-over-year versus 2.8% in April.
  • The key takeaway from the report is that it was right on the mark with numbers supporting a soft landing and moderating inflation, which will keep alive the market's hope for a Fed rate cut before the November election.
• Yield Check:
  • 2-yr: -4 bps to 4.68%
  • 3-yr: -4 bps to 4.46%
  • 5-yr: -3 bps to 4.27%
  • 10-yr: -3 bps to 4.26%
  • 30-yr: -1 bp to 4.42%