Reply To: Bond Traders Weekly Outlook: Absorbed Flood of New Supply Lifting 2-yr Yield to 3 Month High


Early Bonds U.S. Treasuries positive after CPI report is that inflation rates are moving in the right direction, although core inflation in particular will still be viewed by the Fed as “too high,” which is why the prospect of another rate hike in July will be kept alive.

The 2-yr note yield, at 4.59% shortly before the release, is down seven basis points to 4.51%.
The 10-yr note yield, which declined to 3.69% in the immediate aftermath, climbed back to 3.72%, little changed from where it stood before the report.

The fed funds futures market is now pricing in a 6.9% probability of a 25 basis points rate hike tomorrow, down from 20.9% yesterday.

2-yr: -10 bps to 4.49%
3-yr: -12 bps to 4.11%
5-yr: -9 bps to 3.83%
10-yr: -7 bps to 3.70%
30-yr: -5 bps to 3.86%