Bond Market Update

Data Recon

• Factory orders surged 8.2% month-over-month in May (Briefing.com consensus 7.9%) following a downwardly revised 3.9% decline (from -3.7%) in April. Excluding transportation, factory orders increased a more modest 0.2%, following a 0.6% decline in April. Shipments of manufactured goods increased 0.1% on the heels of a 0.3% decline in April.
  • The key takeaway from the report is that business spending picked up markedly in May, reflecting the improved activity that followed the pause on reciprocal tariffs announced in April and the subsequent de-escalation in the U.S.-China tariff measures.
• The ISM Services PMI increased to 50.8% in June (Briefing.com consensus 50.3%) from 49.9% in May. The dividing line between expansion and contraction is 50.0%, so the June reading reflects services sector activity returning to an expansion mode.
  • The key takeaway from the report is that services sector activity returned to growth mode, albeit a growth mode that is still modest at best, while the prices index dipped slightly from May. This is not a report exuding a lot of strength for the largest economic sector, but the direction of travel between May and June (up in activity and down in prices) marks a step in the right direction.
• Yield check:
  • 2-yr: +9 bps to 3.88%
  • 3-yr: +7 bps to 3.84%
  • 5-yr: +6 bps to 3.93%
  • 10-yr: +4 bps to 4.33%
  • 30-yr: +3 bps to 4.85%