Bond Market Update

Opening Advance Reversed

• U.S. Treasuries have backed down from their starting highs after the July PPI report (0.9%; Briefing.com consensus 0.2%) showed a surprisingly large increase, which contrasts with Tuesday's release of in-line CPI. While the market has faced pressure since the release, the selling has not been all that aggressive. As a result, the 30-yr bond continues hanging onto a slim gain while the 2-yr note is now down slightly for the day. The PPI report has exerted some pressure on rate cut expectations, though the fed funds futures market still sees a 96.4% implied likelihood of a 25-basis point cut on September 17.
• Yield Check:
  • 2-yr: +2 bps to 3.71%
  • 3-yr: UNCH at 3.66%
  • 5-yr: +1 bp to 3.78%
  • 10-yr: UNCH at 4.24%
  • 30-yr: -1 bp to 4.82%