Fixed Income Update 06 Jun 2024
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 6 June 2024
The Decline in SUN Yield is Slower, Compared to UST
Core PCE prices, the Fed’s preferred gauge of underlying inflation, only rose by 0.2% MoM, the slowest pace so far this year, raising hopes that inflation may be converging toward its target. Meanwhile, US personal income in Apr ‘24 rose by 0.3% MoM (Cons: 0.3% MoM, Prev: 0.5% MoM). The TIPP Economic Optimism Index in the US for Jun ‘24 fell to 40.5 (Cons: 45.2, Prev: 41.8), the lowest level in six months. The index has been in negative territory for 34 consecutive months since Sep ‘21.
US labor data shows a deterioration:
• Weekly initial jobless claims for the week ending May 25th rose by 3K to 219K.
• The ISM Manufacturing PMI in May ‘24 decreased to 48.7.
• The number of JOLTS job openings in Apr ‘24 dropped by 296K to 8.06 mn, the lowest level since Feb ’21.
• Meanwhile, job quits in Apr ‘2024 also increased to 3.5 mn.
Over the past week, there has been a tendency for UST and SUN yields to decline, where:
• Yield UST2Y -18.16 bps (WoW) VS SUN2Y -18.30 bps (WoW)
• Yield UST5Y -25.96 bps (WoW) VS SUN5Y -4.80 bps (WoW)
• Yield UST10Y -26.04 bps (WoW) VS SUN10Y -4.40 bps (WoW)
Regards,
Fikri C Permana - KBVS Research