Bond Market Update

Short End Dips After August CPI

• U.S. Treasuries have reversed from their morning highs in immediate reaction to the August CPI report, which matched headline expectations (0.2%) while the core reading was up 0.3% (Briefing.com consensus 0.2%), which was slightly hotter than expected. As a result, the yr/yr core CPI growth rate remained at 3.2%, unchanged from July, while the headline growth rate slowed to 2.5% from 2.9%. The post-data selling has been paced by the 2-yr note with its yield recovering the bulk of yesterday's loss while longer tenors outperform, holding slimmer losses.
• Yield Check:
  • 2-yr: +3 bps to 3.64%
  • 3-yr: +1 bp to 3.48%
  • 5-yr: +3 bps to 3.46%
  • 10-yr: +2 bps to 3.67%
  • 30-yr: +2 bps to 3.98%