Bond Market Update

Short End Ahead

• U.S. Treasuries trade in the green with shorter tenors showing relative strength after the market received a cooler-than-expected CPI report for June, which showed month-over-month deflation (-0.4%; Briefing.com consensus -0.1%) and no change in Core CPI (Briefing.com consensus 0.2%). This resulted in a deceleration of the year-over-year CPI rate to 3.5% from 4.2% while Core CPI decelerated to 2.6% from 2.9%. The post-data rally briefly pressured yields past their closing levels from Friday, followed by some backtracking from highs. On a separate note, Fed Chairman Warsh's prepared remarks from today's congressional testimony showed that he will vow to bring down inflation. Equities are off to a modestly higher start with the S&P 500 up 0.1%.
• Yield Check:
  • 2-yr: -8 bps to 4.18%
  • 3-yr: -8 bps to 4.22%
  • 5-yr: -7 bps to 4.30%
  • 10-yr: -4 bps to 4.57%
  • 30-yr: -2 bps to 5.08%