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Stocks Rebound, Treasurys Edge Lower with Tepid Consumer Data

Treasury yields trended higher for a fourth day in a row during today’s low-volume trading session as the holiday weekend approaches.  Yields/swap rates increased an additional 1-4 bps across the curve, bringing the yield on the 10-year note near 2.30%, 16 bps higher than its level to start the week and 9 bps higher on the month, albeit 9 bps lower on the quarter.  All three major stock indices rebounded today, up 0.2%-0.6% — led by gains in the industrial sector.  The US dollar traded marginally higher for the session, up 0.1% against major currencies, but closing 1.3% lower for the month and down 3.3% on the quarter.  Crude oil prices climbed more than 1% today, finishing the week with gains greater than 5%, but still 7.7% down for the month.  WTI crude is currently trading near $46/barrel while Brent crude is near $48/barrel.  Also notable in the commodity sector, soybean futures rose as much as 3.6% throughout the day, the largest increase on record as a report by the USDA detailed soybean crop yields coming in lower than expected.

US economic data releases today were highlighted by a report from the Commerce Department which outlined consumer income and outlays during the month of May.  Consumer spending rose 0.1% last month, in-line with expectations, although this still represented a significant drop-off from April and March’s 0.4% growth.  Personal incomes displayed a 0.4% gain (0.3% expected), edging higher vs. the previous month’s revised +0.3% pace.  Additionally, the personal savings rate was reported to have increased to 5.5% in May, its highest level in eight months.  Inflation data contained in the report was relatively tempered as the PCE price index, the Fed’s preferred measure of inflation, fell 0.1% MoM.  The YoY increase of 1.4% is the lowest we have seen in the past six months, down from 1.7% in April.  The core PCE index rose by 0.1% in May, matching median forecasts.  A separate release on the day showed consumer confidence in the economy leveling off during the month of June.  The University of Michigan’s consumer-sentiment index displayed a 95.1 reading, which was up from the preliminary level of 94.5 but lower than May’s 97.1.  Components of the index were mixed, as respondents recorded an increase in optimism towards current economic conditions, while a measure of expectations for the future declined. 

Hope you have a great weekend.  US financial markets will be closing early on Monday in anticipation of the 4th of July.

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