Bond Market Update

Short End Resists Pressure

• U.S. Treasuries continue trading near levels that were seen about two hours ago with 10s and 30s holding losses while the 2-yr note has been more resilient, hanging onto the bulk of today's post-CPI gain. The outperformance up front comes amid solidifying expectations for another 25-bps rate cut in December with the fed funds futures market now pricing in an 82.3% likelihood of one more cut before the end of the year, up considerably from 58.7% that was seen yesterday, though it is down slightly from 84.4% that was seen one month ago. Today's release of the October CPI report will be followed by more inflation-related news with the market set to receive October PPI (Briefing.com consensus 0.2%; prior 0.0%) and Core PPI (Briefing.com consensus 0.3%; prior 0.2%) tomorrow at 8:30 ET. Equities have been able to overcome some early softness with the S&P 500 (+0.4%) sitting at a session high, as it builds on its rise past the 6000 level.
• Yield Check:
  • 2-yr: -3 bps to 4.29%
  • 3-yr: -5 bps to 4.26%
  • 5-yr: -2 bps to 4.30%
  • 10-yr: +1 bp to 4.45%
  • 30-yr: +5 bps to 4.62%