Bond Market Update

Shifting Expectations

• Following some knee-jerk volatility in the wake of the CPI report at 8:30 a.m. ET, Treasuries have encountered some more intensive selling interest.
• Yields have pressed higher across the curve, with inflation concerns seemingly winning out at the moment, as the CPI report contained some pockets of tariff-driven inflation.
• Seeing some shifting expectations for a rate cut at the September FOMC meeting (July is off the table), with the CME FedWatch Tool showing only a 54% probability now of at least a 25 basis point cut at the September FOMC meeting versus 62.6% a day ago.
• Yield check:
  • 2-yr: +5 bps to 3.95%
  • 3-yr: +5 bps to 3.92%
  • 5-yr: +6 bps to 4.04%
  • 10-yr: +4 bps to 4.47%
  • 30-yr: +4 bps to 5.01%