Bond Market Update

Belly Leads as Core CPI Decelerates

• U.S. Treasuries have rallied after the just-released above-consensus December CPI (0.4%; Briefing.com consensus 0.3%) was coupled with an in-line Core CPI (0.2%; Briefing.com consensus 0.2%), which caused a deceleration in the yr/yr Core CPI rate to 3.2% from 3.3%. Longer tenors outperformed before the report crossed the wires but the belly is now in the lead, sending the 5-yr yield into the lower half of its range from Friday. Equity futures have received a strong boost, setting the stage for a firmly higher open on Wall Street in 50 minutes.
• Yield Check:
  • 2-yr: -7 bps to 4.29%
  • 3-yr: -9 bps to 4.38%
  • 5-yr: -9 bps to 4.50%
  • 10-yr: -8 bps to 4.70%
  • 30-yr: -7 bps to 4.92%