Bond Market Update

Data Recon

• Total CPI increased 0.4% month-over-month in December. That was a tad higher than the Briefing.com consensus estimate, but in-line with consensus estimates seen elsewhere. Core CPI, which excludes food and energy, jumped 0.2% month-over-month, which was in-line with the Briefing.com consensus estimate and slightly better than the consensus estimates seen elsewhere. On a year-over-year basis, total CPI was up 2.9% versus 2.7% in November while core CPI was up 3.2% versus 3.3% in November.
  • The key takeaway from the report for a market worried about inflation heating up again is that these results were better than feared which, at first blush, shrouded the reality that the consumer inflation rate is still running well above the Fed's 2% target (albeit a target tied to the PCE Price Index).
• Yield Check:
  • 2-yr: -8 bps to 4.28%
  • 3-yr: -11 bps to 4.36%
  • 5-yr: -12 bps to 4.47%
  • 10-yr: -11 bps to 4.67%
  • 30-yr: -10 bps to 4.89%