Bond Market Update

Data Recon

• The Producer Price Index for final demand increased 0.2% month-over-month in December (Briefing.com consensus 0.3%), leaving it up 3.3% year-over-year versus 3.0% in November. Excluding food and energy, the index for final demand was unchanged month-over-month (Briefing.com consensus 0.2%), leaving it up 3.5% year-over-year versus 3.5% in November.
  • The key takeaway from the report is that the better-than-expected monthly readings have been clouded by the less inspiring year-over-year readings, as well as the understanding that inflation at the wholesale level moved in the wrong direction in 2024 (versus 2023) and remains elevated relative to the Fed's 2% inflation target.
• Yield Check:
  • 2-yr: -3 bps to 4.37%
  • 3-yr: -3 bps to 4.47%
  • 5-yr: -3 bps to 4.59%
  • 10-yr: -2 bps to 4.79%
  • 30-yr: UNCH at 4.98%