Bond Market Update

Data Recon

• The index for final demand jumped 0.9% month-over-month in July (Briefing.com consensus: 0.2%) following an unchanged reading in June. The index for final demand, excluding food and energy, also increased 0.9% month-over-month (Briefing.com consensus: 0.2%) following an unchanged reading in June. With these readings, the index for final demand is up 3.3% year-over-year, versus 2.4% in June, while the index for final demand, excluding food and energy, is up 3.7%, versus 2.6% in June.
  • The key takeaway from the report, other than that it completely flies in the face of the relatively friendly CPI report, is that wholesale prices rose appreciably across all stages of production and for both goods and services. The concern will be that this inflation will register in the PCE Price Index and keep the Fed from being as aggressive with its rate cut approach as had been envisioned following the CPI data.
• Initial jobless claims for the week ending August 9 decreased by 3,000 to 224,000 (Briefing.com consensus: 228,000), while continuing jobless claims for the week ending August 2 decreased by 15,000 to 1.953 million.
  • The key takeaway from the report is still the same. Layoffs are low, but finding a new job, if laid off, is taking longer.
• Yield Check:
  • 2-yr: +2 bps to 3.71%
  • 3-yr: +1 bp to 3.67%
  • 5-yr: +1 bp to 3.78%
  • 10-yr: +1 bp to 4.24%
  • 30-yr: UNCH at 4.83%