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Yields Increase On Hot CPI

Yields increase across the curve on inflation data

Yields rose along the curve today after CPI data showed that consumer prices increased more than expected. The curve initially flattened on the news with long-term rates decreasing slightly, but weak demand for the U.S. Treasury’s $24 billion 30y bond auction pushed the long-end higher later in the day. The 10y UST yield closed 5 bps higher to 1.42%. All three major equity indices were lower on the day on inflationary concerns and mixed results from J.P. Morgan and Goldman Sachs 2Q earnings releases.

CPI data beats all estimates

U.S. consumer prices beat all forecasts and increased in June by the most since 2008. The consumer price index and core CPI (excludes food and energy) increased 0.9% month-over-month, while year-over-year headline CPI increased by 5.4%.

Small business optimism hits 8-month high

U.S. small business optimism hit an 8-month high on as owners expect the economy to continue improving. The index beat economist expectations, while a record of 34% of owners reported raising wages to fill positions and 46% claimed to have issues filling vacancies. 47% of owners also reported higher selling prices, the largest perentage sine January 1981.

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