Bond Market Update

Opening Losses Recovered

• U.S. Treasuries trade on their highs after a quick recovery of their modest opening losses. Shorter tenors are a bit ahead while longer tenors hold slimmer gains, but the entire complex climbed after the release of today's big batch of data, which showed an upward revision to Q1 GDP (to 2.1% from 1.6%), strong Personal Income Growth in May (0.7%; Briefing.com consensus 0.3%), and another low reading of weekly initial claims (215,000; Briefing.com consensus 225,000). Interestingly, the core PCE Price Index accelerated to 3.4% in May from 3.3% in April, but there was still a small dip in rate hike expectations for later this year. The fed funds futures market now sees about a 60% likelihood of a rate hike in September, down from 66% yesterday. Equities started the day in positive territory, but technology stocks faced some early selling, resulting in a loss in the Nasdaq (-0.4%) while the S&P 500 (+0.5%) remains in the green.
• Yield Check:
  • 2-yr: -3 bps to 4.11%
  • 3-yr: -3 bps to 4.11%
  • 5-yr: -3 bps to 4.15%
  • 10-yr: -3 bps to 4.38%
  • 30-yr: -2 bps to 4.84%