Yields Off Post-PPI Highs, YtD High Holds In 10s

Tsys find a base as bears fail to breach the early ’24 high in 10-Year yields (4.3301%)

• The equivalent mark in TY futures (~109-14+ today) holds, although the contract prints a fresh outright YtD low (109-15), before rebounding to ~109-20.
• Note that PPI data provided strong headline and core metrics, but the PCE readthrough appears a little softer (on net) than was the case with the CPI data.
• FOMC-dated OIS moves back off post-data extremes to last show 85bp of cuts through ’24 (78.5bp of cuts briefly printed post-PPI).
• That leaves a little over 3x 25bp rate cuts priced over that horizon after the aggressive repricing from late ‘23/early ’24 extremes.
• This week’s run of inflation data plays into the cautious FOMC stance re: the prospect for rate cuts, with even some of the historically dovish leaning members (such as Bostic) expressing restraint on that front.