Bond Market Update

Longer Tenors Turn Negative

• U.S. Treasuries have seen some light pressure since our last update, though that has been enough to lift yields on longer tenors to fresh highs for the month. The short end remains ahead, but the 2-yr note has given back roughly half of its gain that was recorded in the wake of the December PPI report. Tomorrow's session will feature the release of the December CPI (Briefing.com consensus 0.3%; prior 0.3%) and Core CPI (Briefing.com consensus 0.2%; prior 0.3%) so it will be interesting to see if the market's reaction to that release has more staying power than what was seen today. Equities are having a sloppy showing for the second day in a row with the S&P 500 (-0.1%) now down slightly after giving back its early gain. Elsewhere, crude oil is pulling back from its highest level since mid-August after starting the month with a 10.0% gain.
• Yield Check:
  • 2-yr: -2 bps to 4.38%
  • 3-yr: -2 bps to 4.48%
  • 5-yr: -1 bp to 4.61%
  • 10-yr: UNCH at 4.81%
  • 30-yr: +2 bps to 5.00%