Bond Market Update

Data Recon

• The ISM Manufacturing Index dipped to 53.3% in June (Briefing.com consensus 53.8%) from 54.0% in May. The dividing line between expansion and contraction is 50.0%, so the June figure suggests manufacturing activity expanded in June but at a slightly slower pace than the prior month.
  • The key takeaway from the report is that there was a general slowdown indicated versus May across most components of the report, yet the slowdown that will matter most is the one seen in the prices index, which is still quite high but nonetheless moving in the preferred direction.
• Construction spending increased 0.1% month-over-month in May (Briefing.com consensus: 0.5%) after increasing a downwardly revised 0.3% (from 0.4%) in April. On a year-over-year basis, construction spending was down 1.5%.
  • The key takeaway from the report is that public construction spending was the driver of the modest growth in total construction spending in June. Private construction spending activity was disappointing.
• Yield Check:
  • 2-yr: UNCH at 4.14%
  • 3-yr: +1 bp to 4.15%
  • 5-yr: +2 bps to 4.20%
  • 10-yr: +4 bps to 4.46%
  • 30-yr: +5 bps to 4.96%