Bond Market Update

Updated: 27-Jun-25 09:04 ET
Q2 GDP forecast to be pressured by decline in real PCE

Data Recon

  • Personal income declined 0.4% month-over-month in May (Briefing.com consensus +0.4%) following a downwardly revised 0.7% increase (from 0.8%) in April. Personal spending declined 0.1% (Briefing.com consensus +0.2%) following a 0.2% increase in April. Real personal spending declined 0.3%, which will be a drag on Q2 GDP forecasts. The PCE Price Index increased 0.1% month-over-month, as expected, but the core-PCE Price Index jumped 0.2% month-over-month, which was higher than expected (Briefing.com consensus 0.1%). Those moves left the PCE Price Index up 2.3% year-over-year, versus 2.2% in April, and the core-PCE Price Index up 2.7% year-over-year, versus 2.6% in April.
    • The key takeaway from the report is that it has a stagflation aura about it, meaning it is a poor report for the growth outlook and a poor report for the inflation trend. That leaves the Fed between a rock and a hard policy place, yet given the Fed's attention to inflation concerns at this juncture, it seems like a report that will keep the Fed reluctant to cut rates at its July FOMC meeting.
  • Yield check:
    • 2-yr: +2 bps to 3.74%
    • 3-yr: +2 bps to 3.71%
    • 5-yr: +2 bps to 3.82%
    • 10-yr: +1 bp to 4.26%
    • 30-yr: -1 bp to 4.81%
Cookies are essential for making our site work. By using our site, you consent to the use of these cookies. Read our cookie policy to learn more.