Bond Market Update

Data Recon

• Personal income increased 0.4% month-over-month (Briefing.com consensus 0.5%) following an unrevised 0.5% increase in March. Personal spending rose 0.9% month-over-month (Briefing.com consensus 0.6%) following an upwardly revised 1.4% increase (from 1.1%) in March. The PCE Price Index was up 0.2% month-over-month (Briefing.com consensus 0.3%) and the core-PCE Price Index, which excludes food and energy, was up 0.3% month-over-month, as expected.
• The key takeaway from the report is that there was a moderation in the year-over-year rates for the price indexes, which will support the peak inflation narrative. The PCE Price Index was up 6.3% year-over-year, versus 6.6% in March, and the core-PCE Price Index, the one the Fed watches most closely, was up 4.9% year-over-year, versus 5.2% in March.
• Still, we'd be remiss not to mention that the spending increase outpaced the income increase in April. The drop in the personal savings rate as a percentage of disposable personal income, to 4.4% from 5.0% in March, corroborates the claim that consumers were spending out of savings either to maintain their standard of living or to absorb the impact of higher prices for most goods and services.
  • Wages and salaries increased 0.6% month-over-month.
  • Personal current transfer receipts were flat month-over-month.
  • Real disposable personal income was down 6.2% year-over-year, marking the fifth straight decline.
  • Real personal spending was up 2.8% year-over-year versus 2.6% in March.
• Yield Check:
  • 2-yr: -2 bps to 2.46%
  • 3-yr: -1 bp to 2.62%
  • 5-yr: -2 bps to 2.70%
  • 10-yr: -2 bps to 2.74%
  • 30-yr: -4 bps to 2.95%