Bond Market Update

Longer Tenors Show Post-CPI Resilience

• U.S. Treasuries have rebounded off their post-CPI lows, though most tenors remain in negative territory with the front end showing relative weakness. Treasuries started the day with modest gains, but quickly slumped to lows after the September CPI report was a touch hotter than expected at the core level (0.3%; Briefing.com consensus 0.2%), which quickly lifted the market's expectations for an October rate hike to 63% from just 22% yesterday. The entire complex has spent the past four hours in a steady rise off lows with longer tenors making the most progress. The long bond has returned to unchanged in recent trade while the 10-yr yield remains up two basis points at 5.24% after setting a high just below 5.33% in morning trade. Equity indices trade just above their lows with the S&P 500 down 1.0% while the Nasdaq (-1.5%) underperforms.
• Yield Check:
  • 2-yr: +6 bps to 4.85%
  • 3-yr: +4 bps to 4.96%
  • 5-yr: +4 bps to 5.04%
  • 10-yr: +2 bps to 5.24%
  • 30-yr: UNCH at 5.56%