Bond Market Update
Updated: 26-Jun-25 09:17 ET
Yields dip after data deluge
Data Recon
- Durable goods orders surged 16.4% month-over-month in May (Briefing.com consensus 6.6%) on a 230.8% increase in orders for nondefense aircraft and parts. Excluding transportation, durable goods orders were up 0.5% month-over-month (Briefing.com consensus 0.1%).
- The key takeaway, however, is that new orders for nondefense capital goods, excluding aircraft -- a proxy for business spending -- increased 1.7% on the heels of a 1.4% decline in April, reflecting a strong rebound after the reciprocal tariff pause announcement.
- Initial jobless claims for the week ending June 21 decreased by 10,000 to 236,000 (Briefing.com consensus 247,000), while continuing jobless claims for the week ending June 14 increased by 37,000 to 1.974 million, which is the highest level since November 6, 2021.
- The key takeaway from the report is that initial jobless claims -- a leading indicator -- remain entrenched at fairly low levels that are not associated with a recession or even a significant slowdown for that matter, but to be fair, continuing jobless claims are elevated and do point to some softening in the labor market. Businesses may not be laying off a lot of employees, but it has gotten more challenging to find a new job after losing a job.
- The third estimate for Q1 GDP featured a downward revision to -0.5% (Briefing.com consensus -0.2%), from the second estimate of -0.2%, that was driven by downward revisions to consumer spending and exports that were partly offset by a downward revision to imports. The GDP Price Deflator increased to 3.8% (Briefing.com consensus 3.7%) from the second estimate of 3.7%.
- The key takeaway is that this report is very much "dated," given that we are just a few days away from the end of the second quarter, so it shouldn't have much cachet as a mover for a market that has been cheered since early April by the arrival of hard economic data that has quieted recession concerns.
- The Advance International Trade in Goods deficit widened to $96.6 billion in May from -$87.0 billion in April, with exports dropping more than imports. Adv. Retail Inventories increased 0.3% after being unchanged in April, and Adv. Wholesale Inventories fell 0.3% after a 0.1% increase in April.
- Yield check:
- 2-yr: -4 bps to 3.74%
- 3-yr: -3 bps to 3.71%
- 5-yr: -2 bps to 3.82%
- 10-yr: -3 bps to 4.26%
- 30-yr: -1 bp to 4.83%