Bond Market Update

Data Recon

• Personal income increased 0.3% month-over-month in June (Briefing.com consensus: 0.3%) following a 0.4% decline in May; personal spending increased 0.3% month-over-month (Briefing.com consensus: 0.4%) following an upwardly revised unchanged reading (from -0.1%) in May; the PCE Price Index was up 0.3% month-over-month (Briefing.com consensus: 0.3%) and 2.6% yr/yr (vs 2.4% in May); and the core-PCE Price Index was up 0.3% month-over-month (Briefing.com consensus: 0.3%) and 2.8% yr/yr (vs 2.8% in May).
  • The key takeaway from the report is that real personal spending was up a modest 0.1% in June. That isn't much, although it does show that consumers continue to have the capacity to spend in the face of higher prices.
• Initial jobless claims for the week ending July 26 increased by 1,000 to 218,000 (Briefing.com consensus: 220,000). Continuing jobless claims for the week ending July 19 were unchanged at 1.946 million.
  • The key takeaway from the report is the recognition that employers still remain reluctant to lay off employees, but employees that do get laid off are facing a tougher time finding a new job.
• The Q2 Employment Cost Index increased 0.9% (Briefing.com consensus: 0.8%) for the 3-month period ending in June 2025, with wages and salaries up 1.0% and benefit costs up 0.7%.
  • The key takeaway from the report is that compensation costs have moderated, which could serve to lower some of the inflation temperature at the Fed.
• Yield Check:
  • 2-yr: UNCH at 3.94%
  • 3-yr: -1 bp to 3.88%
  • 5-yr: -2 bps to 3.95%
  • 10-yr: -3 bps to 4.35%
  • 30-yr: -3 bps to 4.88%