Bond Market Update

Data Recon

• Total CPI increased 0.2% month-over-month, as expected. Core CPI, which excludes food and energy, rose 0.3% month-over-month, also as expected. Those readings left CPI up 2.7% year-over-year, unchanged from June, and core CPI up 3.1% year-over-year, up from 2.9% in June.
  • The key takeaway from the report lurks in the details. The headline readings look good, yet there are enough component indexes exhibiting tariff-induced inflation pressures (i.e., large month-over-month changes) that one can't walk away with an "all-clear" inflation signal from this report. It seems doubtful that all Fed officials will, given the 3.1% year-over-year reading for core CPI.
• Yield Check:
  • 2-yr: -2 bps to 3.73%
  • 3-yr: -2 bps to 3.70%
  • 5-yr: -2 bps to 3.80%
  • 10-yr: -1 bp to 4.26%
  • 30-yr: +1 bp to 4.85%