Bond Market Update

Good Behavior

• Treasuries are behaving well in a bull steepener trade driven by this week's CPI and PPI data, which have eased some of the market's rate-hike concerns for the time being.
• The probability of a July rate hike is only 10.2% now, according to the CME FedWatch Tool. The probability of at least a 25-basis point hike doesn't tip past 50% until the October meeting (57.4%).
• Stocks had surrendered earlier gains but have again regrouped in a buy-the-dip trade that has each of the major indices back in positive territory for the day.
• Yield check:
  • 2-yr: -7 bps to 4.12%
  • 3-yr: -7 bps to 4.17%
  • 5-yr: -7 bps to 4.25%
  • 10-yr: -5 bps to 4.54%
  • 30-yr: -1 bp to 5.08%