Bond Market Update

Data Recon

• Total CPI was up 0.4% month-over-month in August (Briefing.com consensus 0.3%) following a 0.3% increase in July. Core CPI, which excludes food and energy, was up 0.3%, as expected, following a 0.3% increase in July. On a year-over-year basis, total CPI was up 2.9%, versus 2.7% in July, while core CPI was up 3.1%, unchanged versus July and still well above the Fed's 2.0% inflation target (specifically for PCE inflation).
  • The key takeaway from the report (for Main Street) is that food prices were starkly elevated in August (+0.5%), as were shelter (+0.4%), apparel (+0.5%), transportation services (+1.0%), and gasoline (+1.9%) prices.
• Initial jobless claims for the week ending September 6 spiked by 27,000 to 263,000 (Briefing.com consensus: 240,000). Continuing jobless claims for the week ending August 30 were 1.939 million, unchanged from the prior week.
  • The key takeaway from the report is rooted in the eye-opening initial jobless claims print, which will be construed in the market's mind as a weakening labor market signal and another basis for the Fed to cut rates in September, as well as in October and December.
• Yield Check:
  • 2-yr: -2 bps to 3.51%
  • 3-yr: -2 bps to 3.47%
  • 5-yr: -2 bps to 3.57%
  • 10-yr: -1 bp to 4.02%
  • 30-yr: -1 bp to 4.67%