Bond markets have started under pressure with the release of old inflation data

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Published Date 12/5/2025

Two key but dated reports this morning. September PCE inflation and September personal income and spending.

September overall month/month PCE inflation expected at +0.3%, reported +0.3% and up from +0.2% in August, year/year overall thought to be +2.8%, reported at +2.7% up from 2.6% in August. Core month/month estimates were +0.3%, reported at +0.2%, year/year core expected at +2.9% reported at +2.9% and unchanged from August. Old data but inflation not increasing.

September personal income month/month +0.4% as expected. Personal spending thought to be +0.4% increased to +0.6%.

The initial reaction in the bond and mortgage markets relatively subdued, the 10 increased 1 bps to 4.12%, MBS prices unchanged from yesterday.

There wasn’t any noticeable reaction to the inflation report that was in line with forecasts and doesn’t reflect current conditions. The data doesn’t change the outlook the Fed will cut their key rate next week.

The Fed worries about the weakening employment condition that manifested yesterday from the job placement firm Challenger, Gray and Christmas saying November business firms planned 71,321 layoffs totaling 1.17 million lay-offs in 2025. The total is 54% higher than the same 11-month period a year ago and the highest level since 2020 but November was less than October’s 153K cuts. Last Wednesday ADP reported November jobs were -32K with estimates at +20K.

At 9:30 am the DJIA opened +85, NASDAQ +103, S&P +18. 10 year note 4.11% +1 bp. FNMA 5.5 30 year coupon at 9:30 am +2 bps from yesterday’s close and -5 bps from 9:30 am yesterday.

At 10 am the mid-month University of Michigan consumer sentiment index, expected at 52 from 51.0 at the end of November the sentiment index increased to 53.3.

Source: TBWS

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Jeff Beck

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