Treasuries gained for the first time in eight days yesterday, ending the longest decline in over a year, as Industrial Production unexpectedly declined in August; this is the first decline in Industrial Production in seven months. The Producer Price Index for final demand was flat in August, following a +0.1% advanced in July and +0.4% in June. Within intermediate demand, prices for processed goods fell -0.3%, the index for unprocessed goods declined -3.3%, and prices for services edged up +0.2%. Today the FOMC begins their meeting to discuss short term interest rates, and we await tomorrow’s asset purchase/rate decision. Treasuries are opening slightly higher, continuing the momentum from yesterday’s unexpected production decline, and the curve has bull flattened with 2s10s down -0.8 bps.
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