Bond Market Update

Data Recon

• The producer price index for final demand surged 1.4% month-over-month in April (Briefing.com consensus: 0.4%) following an upwardly revised 0.7% increase (from 0.5%) in March. That was the largest advance since March 2022 and nearly 60% of the increase was attributed to a 1.2% advance in the index for final demand services. Excluding food and energy, the index for final demand jumped 1.0% (Briefing.com consensus: 0.3%) on the heels of an upwardly revised 0.2% increase (from 0.1%) in March. The producer price index for final demand was up 6.0% year-over-year versus 4.3% in March, while the index for final demand, excluding food and energy, was up 5.2% versus 4.0% in March.
  • The key takeaway from the report is that the surge in producer prices in April wasn't just energy-related. That surge accounted for the bulk of the 2.0% increase in the index for final demand goods, but two-thirds of the "broad-based advance" in the index for final demand services was attributed to a 2.7% increase in margins for final demand trade services.
• Yield Check:
  • 2-yr: UNCH at 4.00%
  • 3-yr: UNCH at 4.03%
  • 5-yr: +1 bp to 4.13%
  • 10-yr: +2 bps to 4.48%
  • 30-yr: +1 bp to 5.04%