Bond Market Update

Data Recon

• The index for final demand decreased 0.1% month-over-month in August (Briefing.com consensus: 0.3%) following a downwardly revised 0.7% increase (from 0.9%) in July. Excluding food and energy, the index for final demand was also down 0.1% month-over-month (Briefing.com consensus: 0.3%) following a downwardly revised 0.7% increase (from 0.9%) in July. On a year-over-year basis, the index for final demand was up 2.6%, versus 3.1% in July, while the index for final demand, excluding food and energy, was up 2.8%, versus 3.4% in July.
  • The key takeaway from the report is that it will ease the market's angst about pass-through effects for consumers, especially with the index for final demand services sliding 0.2% month-over-month. The added takeaway is that this report will keep the market locked on its view that there will be at least 75 basis points of rate cuts by the Fed before the end of the year.
• Yield Check:
  • 2-yr: -1 bp to 3.53%
  • 3-yr: -2 bps to 3.48%
  • 5-yr: -1 bp to 3.59%
  • 10-yr: UNCH at 4.07%
  • 30-yr: +1 bp to 4.73%