Bond Market Update

Data Recon

• U.S. Treasuries have slid to lows after the July Retail Sales report beat expectation by a sizable margin. Shorter tenors have been at the forefront of the post-data selling, though longer tenors also trade well below their flat lines at this time.
• Total retail sales were up 1.0% month-over-month in July (Briefing.com consensus 0.3%) following a downwardly revised 0.2% decline (from 0.0%) in June. Excluding autos, retail sales rose 0.4% following an upwardly revised 0.5% increase (from 0.4%) in June.
  • The key takeaway from the report is that the increase in retail sales outpaced the rate of inflation in July, which connotes an understanding that the improvement in retail sales was driven by increased demand on top of price increases.
• Initial jobless claims for the week ending August 10 decreased by 7,000 to 227,000. Recall that initial jobless claims hit 250,000 just a few weeks ago. Continuing jobless claims for the week ending August 3 decreased by 7,000 to 1.864 million.
  • The key takeaway from the report is that initial claims remain well below levels typically associated with recession conditions.
• Import prices were up 0.1% month-over-month in July. Excluding fuel, they were also up 0.1%. Export prices increased 0.7% month-over-month. Excluding agricultural products, export prices were up 1.0%.
  • The key takeaway from this report is that import and export prices were well behaved on a year-over-year basis. Import prices were up 1.6% (+1.2% excluding fuel) and export prices were up 1.4% (+2.3% excluding agricultural products).
• 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: +12 bps to 3.94%
  • 30-yr: +10 bps to 4.21%