Bond Market Update

Data Recon

• Industrial production increased 0.1% month-over-month in September (Briefing.com consensus 0.1%) following a downwardly revised 0.3% decline (from 0.1%) in August. The capacity utilization rate was 75.9% (Briefing.com consensus 77.3%) following a downwardly revised 75.9% (from 77.4%) in August (note: annual revisions were released November 24). Total industrial production increased 1.6% yr/yr, while the capacity utilization rate was 3.6 percentage points below its long-run average.
  • The key takeaway from the report is the downshift in the capacity utilization rate, which implies there is slack in the industrial sector that should translate into reduced inflation pressure.
• Yield Check:
  • 2-yr: -4 bps to 3.48%
  • 3-yr: -3 bps to 3.50%
  • 5-yr: -3 bps to 3.63%
  • 10-yr: -2 bps to 4.06%
  • 30-yr: -1 bp to 4.73%