Bond Market Update

Data Recon

• The Bureau of Economic Analysis released the Personal Income/Outlays report for November alongside the delayed report for October. In November, Personal Income increased 0.3% month-over-month (Briefing.com consensus 0.4%) after a 0.1% increase in October (Briefing.com consensus 0.3%). Personal spending was up 0.5% in November (Briefing.com consensus 0.4%) after also increasing 0.5% in October (Briefing.com consensus 0.4%). The PCE Price Index was up 0.2% month-over-month in October and November, as expected, while the core PCE Price Index was also up 0.2% for both months, which was also expected. On a year-over-year basis, the PCE Price Index decelerated to 2.7% in October but edged back up to 2.8% in November. The Core PCE Price Index also decelerated to 2.7% in October and edged back up to 2.8% in November.
  • The key takeaway from the report is that the core PCE Price Index, which is the Fed's preferred inflation gauge, was at 2.8% in November, essentially unchanged from September. As a result, this report should not alter the Fed's outlook since the inflation picture remains largely unchanged.
• Yield Check:
  • 2-yr: +1 bp to 3.61%
  • 3-yr: +2 bps to 3.68%
  • 5-yr: +3 bps to 3.86%
  • 10-yr: +2 bps to 4.27%
  • 30-yr: +1 bp to 4.89%