Bond Market Update

Data Recon

• The Producer Price Index for final demand increased 1.1% month-over-month in May (Briefing.com consensus: 0.7%) following a downwardly revised 1.1% increase (from 1.4%) in April. Excluding food and energy, the index for final demand jumped 0.4% month-over-month (Briefing.com consensus: 0.4%) following a downwardly revised 0.7% increase (from 1.0%) in April. On a year-over-year basis, the index for final demand was up 6.5%, while the index for final demand, excluding food and energy, was up 4.9%.
  • The key takeaway from the report is that producers aren't finding much price relief; hence, it is expected that consumers won't find much price relief in the near-term either, unless producers choose to absorb the higher costs.
• Initial jobless claims for the week ending June 6 increased by 4,000 to 229,000 (Briefing.com consensus: 222,000), while continuing claims for the week ending May 30 increased by 24,000 to 1.795 million.
  • Jobless claims were higher in the latest week, but the key takeaway remains that they are not at levels that would connote a material degradation of the labor market.
• Yield Check:
  • 2-yr: +1 bp to 4.14%
  • 3-yr: +1 bp to 4.19%
  • 5-yr: UNCH at 4.26%
  • 10-yr: -1 bp to 4.53%
  • 30-yr: -2 bps to 5.01%