Free Trial

Yields Higher Despite Dip in Core CPI, PPI Up Next

US TSYS
  • Treasury futures finishing near late session lows after initially gapping to session highs (TYU3 tapped 111-29) following this morning's July CPI: core MoM 0.16% vs. 0.2% est. Core goods deflation accelerated to -0.33% M/M from -0.05% M/M.
  • The drag from used vehicles was at the low end of expectations seen beforehand, at -1.34% M/M vs analysts averaging circa -2% (ranging from -1.3% to -3.2%) after -0.45% M/M. There should be further declines in the pipeline. However, more notable from the goods side was core goods ex used vehicles printing -0.18% M/M after two 0.00% M/M readings.
  • Initial jobless claims disappointed as they surprisingly increased to 248k (cons 230k) after an unrevised 227k, for its largest weekly increase since early June.
  • Fed pricing comes off post-CPI session lows but only just with SF Fed’s Daly (’24 voter) noting the Fed still has more work to do and that the CPI data was largely as expected and that it doesn’t say ‘victory is ours’ on inflation.
  • Daly added the Fed is yet to determine whether to raise and how long to hold rates, with Daly being data dependent and it premature to decide on another hike. There is a lot more info coming in before the September meeting and before year-end.
  • Delayed reaction, Treasury futures traded weaker after $23B 30Y auction (912810TT5) tailed with 4.189% high yield vs. 4.175% WI; 2.42x bid-to-cover vs. 2.43x in the prior month.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.