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


U.S. Treasuries modestly higher start, The Producer Price Index for final demand declined 0.3% month-over-month in May (consensus -0.1%) while the index for final demand, less foods and energy (“core PPI) increased 0.2% month-over-month, as expected.

On a year-over-year basis, the index for final demand was up 1.1% year-over-year, versus 2.3% in April, and the index for final demand less foods and energy was up 2.8% year-over-year, versus 3.2% in April.

The key takeaway from the report is the recognition that wholesale inflation is moving in the right direction, which should be pleasing to the Fed and a reprieve for corporate profit margins.

2-yr: -8 bps to 4.62%
3-yr: -7 bps to 4.23%
5-yr: -7 bps to 3.95%
10-yr: -5 bps to 3.79%
30-yr: -3 bps to 3.91%