Bond Market Update

Opening Gains Reversed

• U.S. Treasuries have given back their starting gains after the advance reading of Q4 GDP showed below-consensus growth (1.4%; Briefing.com consensus 3.0%) combined with stubborn inflation as the GDP Price Deflator was up 3.6%. On a positive side, the Fed's preferred inflation gauge, the Core PCE Price Index, decelerated to 2.7% from 2.9%, but it was still a bit hotter than the market had expected. The post-data pullback from highs has been paced by the short end while longer tenors hover just below their unchanged levels at this time.
• Yield Check:
  • 2-yr: +1 bp to 3.48%
  • 3-yr: UNCH at 3.50%
  • 5-yr: UNCH at 3.65%
  • 10-yr: UNCH at 4.08%
  • 30-yr: UNCH at 4.71%