2-Year Treasury Yields Decline ~4bps

Short end of the yield curve falls on strong auction demand. 2-year Treasury yields closed 4bps lower today, reversing a 3bp rise early in the trading session. The move was largely attributed to strong demand at a $69B sale of 2-year Treasury notes and weaker than expected Richmond manufacturing (-19 vs. -14 expected), both of which overshadowed strong consumer confidence data. Meanwhile, markets are now looking ahead to tomorrow’s Nvidia earnings call, where analysts expect a fourth straight quarter of triple-digit (annualized) revenue growth. Nvidia stock is currently up over 165% year-to-date.

Consumers are more optimistic but concerned about labor conditions. The Conference Board’s consumer confidence index rose from July’s upwardly revised 101.9 result to 103.3 in August, compared to 100.8 surveyed estimates. The results place consumer confidence at its highest level since February’s 104.8 index reading. Upcoming rate cut prospects are a key factor in supporting consumer positivity, but sentiment remains depressed compared to pre-pandemic levels due to emerging labor market strains. Conference Board chief economist Dana Peterson said today, “Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic.”

Corn prices are plummeting. Record high corn and soybean prices from 2021/2022 are now well in the rearview mirror as ample rainfall across Midwest/central farmland has been the latest detriment to the commodities’ values. Higher domestic and Brazilian supply has weighed on the price that farmers receive for their production, pushing the producer price index for corn to around half its recent high set in September 2022. The PPI is now at ~163 versus ~326 in September 2022. The price action is similar to crude oil, as prices for both remain well above COVID levels but far from their highs set in 2022.