Bond Market Update

Data Recon

• Industrial production increased 0.3% month-over-month in June (Briefing.com consensus 0.1%) following an upwardly revised unchanged reading (from -0.2%) in May. The capacity utilization rate was 77.6% (Briefing.com consensus 77.4%), versus an upwardly revised 77.5% (from 77.4%) in May. Total industrial production increased 0.7% yr/yr while the capacity utilization rate was 2.0 percentage points below its long-run average.
  • The key takeaway from the report is that the jump in industrial production in June was driven mostly by an increase in the output of utilities, which tends to be volatile based on weather conditions. Manufacturing output was up, but only by a modest 0.1% despite a more conciliatory tariff environment.
    • Manufacturing output increased 0.1% following an upwardly revised 0.3% increase (from 0.1%) in May, with the durable manufacturing index unchanged and the nondurable manufacturing index increasing 0.3%. Manufacturing capacity utilization edged up to 76.9% from 76.8%.
    • Mining output decreased 0.3% following a 0.1% increase in May. Mining capacity utilization dipped to 90.6% from 90.9% in May.
    • The output of utilities surged 2.8% following a 2.5% decline in May. Utilities capacity utilization jumped to 70.1% from 68.4% in May.
• Yield check:
  • 2-yr: -2 bps to 3.94%
  • 3-yr: -2 bps to 3.91%
  • 5-yr: -3 bps to 4.02%
  • 10-yr: -3 bps to 4.46%
  • 30-yr: -3 bps to 4.99%