Bond Market Update

PCE-eek

• The enthusiasm following the better-than-feared PCE inflation reading this morning has faded, reflected in longer-dated yields that have risen above yesterday's settlement levels.
• PCE inflation was up 3.4% yr/yr in August, and core PCE inflation was up 3.0%. The Fed's inflation target is 2.0%, something Fed Chair Warsh emphasized at his last press conference, so it remains a source of consternation that PCE inflation is still sporting a 3-handle.
• The 10-yr note yield traded down to 5.20% immediately after the PCE inflation data at 8:30 a.m. ET but now sits at 5.28%.
• Yield check:
  • 2-yr: -2 bps to 4.87%
  • 3-yr: -1 bp to 4.98%
  • 5-yr: +1 bp to 5.07%
  • 10-yr: +2 bps to 5.28%
  • 30-yr: +5 bps to 5.64%