The US Treasury complex is surging after both retail sales and CPI fell short of estimates. Post-data buying has yields down almost 7 basis points in the belly of the curve. Retail sales fell 0.3% month-over-month in May, missing the flat reading that was anticipated. CPI fell 0.1% mum and rose 1.9% on year-vover-year basis. Here’s a look at the scoreboard as of 8:41 a.m. ET:
- 2-year -4.4 bps at 1.319%
- 3-year -5.3 bps at 1.455%
- 5-year -5.9 bps at 1.722%
- 7-year -5.6 bps at 1.964%
- 10-year -5.1 bps at 2.160%
- 30-year -3.7 bps at 2.828%
Wednesday’s bid has yields at the long end of the curve flirting with their lowest levels since the election. Yields rallied sharply in the weeks after Trump’s victory on the prospect that his policies would bring back inflation to the US. However, Trump’s agenda has stalled and the Fed has continued to hike rates, causing yields at the long end to slide off their mid-March highs.
The Treasury market will be in focus on Wednesday as the Federal Reserve is expected to raise its benchmark interest rate for the third time since December, and fourth time since the end of the financial crisis. Bloomberg data shows a 95.7% chance the Fed hikes at the meeting.