Bond Market Update

Data Recon

• Total CPI for the two-month period from September to November was up 0.2% (Briefing.com consensus: 0.3%), while core CPI, which excludes food and energy, was also up 0.2% for the two-month period (Briefing.com consensus: 0.3%). The October data were not available due to the government shutdown. On a year-over-year basis, total CPI increased 2.7% versus a prior 3.0%, and core CPI was up 2.6% versus a prior 3.0%.
  • The key takeaway from the report is twofold: first, it is a messy report because of the lack of October data, but secondly and more to the point today, the disinflation in the year-over-year readings is a welcome sight for policymakers and market participants.
• Initial jobless claims for the week ending December 13 decreased by 13,000 to 224,000 (Briefing.com consensus: 229,000). Continuing jobless claims for the week ending December 6 increased by 67,000 to 1.897 million.
  • The key takeaway from the report is its low firing-low hiring dynamic, evidenced by the decrease in initial claims and the increase in continuing claims. That is a delicate balance that helps validate the Fed's willingness to walk the line with a rate cut at its December meeting, particularly when paired with the disinflation seen in the November CPI report.
• Yield Check:
  • 2-yr: -5 bps to 3.44%
  • 3-yr: -5 bps to 3.48%
  • 5-yr: -5 bps to 3.65%
  • 10-yr: -4 bps to 4.11%
  • 30-yr: -3 bps to 4.80%