Bond Market Update

Data Recon

• Durable goods orders were flat month-over-month in August (Briefing.com consensus: -0.4%) following a downwardly revised 0.9% increase (from 1.1%) in July. Excluding transportation, orders were up 0.3% month-over-month (Briefing.com consensus: 0.5%) following an upwardly revised 0.7% increase (from 0.4%) in July.
  • The key takeaway from the report is that nondefense capital goods orders, excluding aircraft, which are a proxy for business spending, jumped a robust 1.6% month-over-month after increasing 0.6% in July.
• The final reading for the University of Michigan Consumer Sentiment Index for September increased to 48.1 (Briefing.com consensus: 47.8) from the preliminary reading of 47.8. The final reading for August was 51.7. In the same period a year ago, the index stood at 55.1.
  • The key takeaway from the report is that high prices continue to adversely affect consumer sentiment, souring the short-run outlook for business conditions and expectations for year-ahead personal finances.
    • Year-ahead inflation expectations held steady with the preliminary reading of 4.6%, up from 4.0% in August, and hitting their highest level since June.
    • Long-run inflation expectations were unchanged from the preliminary reading of 3.4%.
• Yield check:
  • 2-yr: -1 bp to 4.90%
  • 3-yr: -1 bp to 4.98%
  • 5-yr: unch at 5.04%
  • 10-yr: +3 bps to 5.21%
  • 30-yr: +4 bps to 5.51%