Fixed Income Recap

Treasuries sold off on a very quiet day in the market. The two-year finished down 1/64, and the ten-year was lower by 23/64. The benchmark curve steepened by 3.5 basis points, and currently sits at +227.5 bps. A basis point represents .01%.

TIPS
CPI, the measure for inflation that is used for the principal adjustment of TIPS, was released this morning for the month of April. The headline number came in at unchanged from the previous month, in line with expectations. The core index (not including Food & Energy), increased .3% month-over-month, compared to the .1% that was expected.
TIPS outperformed nominal coupons today. The TIPS ETF (ticker TIP) was up .21% while the nominal Treasury ETF (ticker IEF) was down .25%. TIPS outperformance for the year is pretty impressive. The deflation scare of last fall has truly died.

Have a great evening.

Cliff J. Reynolds Jr., Junior Analyst