Bond Market Update

Data Recon

• U.S. Treasuries trade near their best levels of the morning, having climbed in reaction to a cooler-than-expected Core PPI reading for July.
• The Producer Price Index for final demand increased 0.1% month-over-month in July (Briefing.com consensus 0.1%). The index for final demand, less foods and energy, was flat (Briefing.com consensus 0.2%) following a downwardly revised 0.3% increase (from 0.4%) in June. On a year-over-year basis, the index for final demand was up 2.2% versus 2.7% in June. The index for final demand, less foods and energy, was up 2.4% versus 2.9% in June.
  • The key takeaway from the report is the disinflation trend in total and core PPI, as that is moving in a necessary direction to drive a rate cut by the Fed.
• Yield Check:
  • 2-yr: -5 bps to 3.97%
  • 3-yr: -5 bps to 3.78%
  • 5-yr: -4 bps to 3.71%
  • 10-yr: -4 bps to 3.87%
  • 30-yr: -3 bps to 4.17%