Bond Market Update

Data Recon

• Personal Income increased 0.4% month-over-month in July (Briefing.com consensus 0.2%), personal spending was up 0.2% (Briefing.com consensus 0.2%), the PCE Price Index was up 0.2% (Briefing.com consensus 0.1%), and the core-PCE Price Index also rose 0.2% (Briefing.com consensus 0.2%). On a year-over-year basis, the PCE Price Index was up 3.7% versus 3.7% in June, and the core-PCE Price Index was up 3.3% versus 3.3% in June.
  • The key takeaway from the report is that year-over-year rates for the PCE Price Index (3.7%) and the core-PCE Price Index (3.3%) remained at levels from June, so the report did little to alter the market's view of the latest income and spending trends.
• Durable goods orders rose 1.1% month-over-month in July (Briefing.com consensus 0.5%) after a revised 0.5% increase (from 0.3%) in June. Excluding transportation, durable goods orders were up 0.4% month-over-month (Briefing.com consensus 0.5%) after increasing a revised 1.1% (from 0.6%) in June.
  • The key takeaway from the report is that the headline beat was driven by a 12.7% jump in orders for nondefense aircraft and parts while growth in orders excluding transportation undershot expectations slightly due in part to a pullback in new orders for computers and electronic products (-1.1%). However, these orders are still up a healthy 14.3% year-over-year.
• The second estimate of Q2 GDP showed no revision from the advance estimate of 1.5% (Briefing.com consensus 1.5%). The GDP Chain Deflator was revised up to 6.4% (Briefing.com consensus 6.3%) from 6.3% in the advance estimate.
  • The key takeaway from the report is that the overall growth reading held steady as an upward revision to real final sales to private domestic purchasers (to 4.2% from 3.9%) offset a higher drag from imports.
• Yield Check:
  • 2-yr: +2 bps to 4.22%
  • 3-yr: +2 bps to 4.28%
  • 5-yr: +2 bps to 4.37%
  • 10-yr: +2 bps to 4.65%
  • 30-yr: +1 bp to 5.18%