Daily Market Color

Treasurys Rally on Eve of CPI, FOMC

Yields fall on strong UST auction. UST Yields fell 5-8bps across the long end of the curve after today’s $39 billion 10-year UST auction saw the strongest demand since February 2022. Adding further fuel to the decline were bets on softer CPI tomorrow and UST demand stemming from a continued French bond rout due to recent political upheaval. Stocks rose today led by big tech, with the S&P 500 up ~0.30% and the NASDAQ up ~0.90%.

CPI Preview. Tomorrow’s May CPI release is expected to show flat or lower consumer inflation across conventions. An expected decline in gas prices during May should put downward pressure on headline CPI, which is expected to fall from 0.3% to 0.1% month-over-month (MoM) and remain flat at 3.4% on a year-over-year (YoY) basis. Core inflation is expected to remain flat at 0.3% MoM basis but fall from 3.6% to 3.5% YoY.

World Bank raises economic growth forecast. The World Bank boosted its 2024 global economic growth forecast from 2.4% to 2.6% in a report released today. Most of this jump was driven by the World Bank upgrading the US growth forecast from 1.6% to 2.5%. World Bank chief economist Indermit Gill said, “The good news is that the global economy is stabilizing…in good part this is because of the unexpected strength of the US economy.” For smaller and poorer economies, however, he added, “things are not looking good either in terms of stability of growth.”

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