Treasuries rallying but not inflation breakevens post PCE/Continuing claims back above 1.9mm/Chicago PMI/Home sales

Let me start by saying that while regular Treasuries are rallying on the in line inflation print, the inflation breakevens are actually rising a touch with 2 yr and 5 yr levels up about 1 bp. The 10 yr inflation breakeven is unchanged. By the way, the 2 yr inflation breakeven at 2.78% is at the highest since March 2023. The 5 yr is less than 3 bps from the highest since last April. So this is more seemingly a relief, short covering driven rally more than anything else in conventional Treasuries but could also be helped by the highest continuing claims print since mid November.

2 yr Inflation Breakeven

5 yr Inflation Breakeven

Initial jobless claims totaled 215k, 5k more than expected and up from 202k last week. Also of note, continuing claims got back above 1.905mm again, higher by 45k w/o/w. That’s the most since mid November, further evidencing a slowdown in hiring.