T-Bond Futures Market News and Commentary
Sep 10-year T-notes (ZNU19) on Tuesday closed down -8 ticks and the 10-year T-note yield rose +3.1 bp to 2.120%. T-note prices moved lower Tuesday with Sep T-notes at a 5-week low on strength in U.S. economic data. Tuesday's U.S. data showed that June retail sales rose +0.4% and +0.4% ex-autos, stronger than expectations of +0.2% and +0.1% ex-autos, which is hawkish for Fed policy. Also, Jun manufacturing production rose +0.4%, stronger than expectations of +0.3%, and the Jul NAHB housing market index unexpectedly rose +1 to 65, stronger than expectations of unchanged at 64. T-notes recovered from their worst levels Tuesday on dovish comments from Fed Chair Powell who said the Fed is "carefully monitoring" downside risks to U.S. growth and "will act as appropriate to sustain the expansion." Also, slack price pressures are positive for T-note prices after Tuesday's U.S. June import price index ex-petroleum fell -0.4% m/m, weaker than expectations of -0.2% m/m. However, inflation expectations increased Tuesday as the 10-year T-note breakeven inflation expectations rate jumped to a 1-3/4 month high of 1.803% and finished the day up +1.6 bp at 1.796%. The 10-year T-note breakeven inflation expectations rate is well above the 3-week low of 1.638% (July 3) and the mid-June 2-3/4 year low of 1.612%.