Fixed Income Update
Bonds have erased the gains made after this morning’s worse-than-expected July PPI data, which showed significant inflation pressures in the pipeline. The long end is selling off, with the 30yr future down 10 ticks to 117-19 and the 10yr down 4 to 116-08. The 5yr and 2yr are flat.
On the short end, the 4wk bill has also seen some selling pressure (4wk yield up 4bps to 1.77%), while other shorter-dated bills are faring better. The 3-month bill yield is down 2bps to match the 4wk at 1.77%. The 6-month yield is down 7bps to 1.97% and the 1yr bill yield is down 4bps to 2.08%.
Fed fund futures reflect a 90% chance the FED will leave rates unchanged at the September FOMC.