Bond Market Update

Shorter Tenors Widen Losses

• Recent action saw a slip to fresh lows in the 5-yr note and shorter tenors while 10s and 30s remain just above their mid-morning lows. With today's selling, yields on shorter tenors are right back near their highest settlement levels of the year while yields on longer tenors remain about 13 basis points below their May highs. Barring a weekend surge in the price of oil, the front end could see some renewed buying interest in reaction to Tuesday's release of June CPI (Briefing.com consensus -0.1%; prior 0.5%), which is expected to show slight month-over-month deflation. The rest of the week will also bring some noteworthy data, including June PPI (Briefing.com consensus 0.1%; prior 1.1%) on Wednesday, June Retail Sales (Briefing.com consensus 0.3%; prior 0.9%) on Thursday, and June Housing Starts (Briefing.com consensus 1.328 mln; prior 1.177 mln) and Industrial Production (Briefing.com consensus 0.3%; prior 0.1%) on Friday.
• Yield Check:
  • 2-yr: +5 bps to 4.21%
  • 3-yr: +4 bps to 4.24%
  • 5-yr: +4 bps to 4.31%
  • 10-yr: +2 bps to 4.56%
  • 30-yr: +2 bps to 5.07%