Bond Market Update

Data Recon

• Total industrial production decreased 0.6% month-over-month in July (Briefing.com consensus 0.1%) following a downwardly revised 0.3% increase (from 0.6%) in June. The capacity utilization rate fell to 77.8% (Briefing.com consensus 78.6%) from a downwardly revised 78.4% (from 78.8%) in June. Total industrial production was down 0.2% yr/yr while the capacity utilization rate was 1.9 percentage point below its long-run average.
  • The key takeaway from the report is the understanding that it was depressed by Hurricane Beryl, which reduced industrial production by an estimated 0.3 percentage point and manufacturing output by an estimated 0.3 percent. Industrial production wasn't strong in July, but taking the effects of the hurricane into account, it wasn't as weak as it seems either.
• Yield Check:
  • 2-yr: +15 bps to 4.10%
  • 3-yr: +15 bps to 3.91%
  • 5-yr: +14 bps to 3.81%
  • 10-yr: +13 bps to 3.95%
  • 30-yr: +11 bps to 4.22%