Reply To: Bond Traders Weekly Outlook: Bond Market Has Not Bought into Fed’s Tightening Cycle Over


Early Bonds: After the US data bonds turned higher

The second estimate for Q2 GDP growth was marked down to 2.1% (consensus 2.4%) from the advance estimate of 2.4%. The GDP Price Deflator also got marked down to 2.0% (consensus 2.2%) from the advance estimate of 2.2%. The PCE Price Index got revised lower to 2.5% from 2.6%, as did the core-PCE Price Index, which checked in at 3.7% versus the advance estimate of 3.8%.

The key takeaway from the report is that it fits the soft-landing scenario; also, there were downward revisions to the inflation readings, which is something that will continue to drive the market’s belief that the Fed can refrain from another rate hike.

2-yr: -7 bps to 4.84%
3-yr: -6 bps to 4.53%
5-yr: -4 bps to 4.24%
10-yr: -3 bps to 4.09%
30-yr: -2 bps to 4.22%