Bond Market Update

Data Recon

• The Producer Price Index for final demand increased 0.7% month-over-month (Briefing.com consensus: 0.3%) following a 0.5% increase in January. The Producer Price Index for final demand, less foods and energy, jumped 0.5% month-over-month (Briefing.com consensus: 0.4%) following a 0.8% increase in January. On a year-over-year basis, the Producer Price Index for final demand was up 3.4%, versus 2.9% in January, and the Producer Price Index for final demand, less foods and energy, was up 3.9%, versus 3.6% in January.
  • The key takeaway from the report is that the uptick in producer prices was seen in both goods (+1.1%) and services (+0.5%), and the added point is that this higher inflation occurred before the war with Iran and subsequent surge in energy prices, which will foment concerns about a worsening inflation situation.
• Yield check:
  • 2-yr: +5 bps to 3.72%
  • 3-yr: +4 bps to 3.72%
  • 5-yr: +3 bps to 3.82%
  • 10-yr: +2 bps to 4.22%
  • 30-yr: +1 bp to 4.86%