Bond Market Update

Quiet Day

• U.S. Treasuries meandered their way through today's session, lacking any economic reporting catalyst and lying in wait for the most part for next week's batch of economic data and central bank meetings that includes the FOMC meeting on Wednesday, the ECB meeting on Thursday, and the BOJ meeting on Friday. The latter was a topic of conversation today after Bloomberg reported that BOJ officials don't see an urgent need at this point to address the side effects of the yield curve control policy. That report sent the yen reeling against the dollar (USD/JPY +1.2% to 141.79), but the outsized move there was the only move of note on an otherwise quiet end to the week that saw most securities settle the session where they began or very close to it.
• Yield Check:
  • 2-yr: +1 bp to 4.85% (+13 bps for the week)
  • 3-yr: +2 bps to 4.45% (+9 bps for the week)
  • 5-yr: unch at 4.10% (+7 bps for the week)
  • 10-yr: unch at 3.85% (+3 bps for the week)
  • 30-yr: unch at 3.91% (-2 bps for the week)

• News:
  • President Biden to create team to prevent future debt ceiling issues, according to Bloomberg
  • A Bloomberg report indicates BOJ officials don't see much of an urgent need at this point to address the side effects of the yield curve control program
  • China aiming to increase sales of automobiles and electronics, according to Reuters
  • Chinese government-linked hackers accessed email of US ambassador to China, Nicholas Burns, according to The Wall Street Journal
  • White House secures voluntary commitments from leading artificial intelligence companies to manage the risks posed by AI
  • Leading up to next Thursday's ECB policy meeting, economists expect another 25-basis points rate hike but don't believe the ECB will stay at peak rate for a long time, thinking that a rate cut could happen in March next year, according to a Bloomberg survey.
  • By-elections in the UK on Thursday saw the Conservative Party lose two of the three elections. UK Prime Minister Sunak is reportedly looking at November 2024 as the time for the next general election.
  • Spain to hold national election on Sunday
  • Japan's June National CPI 3.3% yr/yr (expected 3.5%; last 3.2%) and Core CPI 3.3% yr/yr (expected 3.3%; last 3.2%)
  • UK's June Retail Sales 0.7% m/m (expected 0.2%; last 0.1%) and -1.0% yr/yr (expected -1.5%; last -2.3%); Core Retail Sales 0.8% m/m (expected 0.2%; last 0.1%) and -0.9% yr/yr (expected -1.6%; last -1.9%)
• Today's Data:
  • There was no U.S. economic data of note today
• Commodities:
  • WTI crude: +1.9% to $77.05/bbl
  • Gold: -0.2% to $1966.10/ozt
  • Copper: -0.3% to $3.82/lb
• Currencies:
  • EUR/USD: flat at 1.1123
  • GBP/USD: flat at 1.2857
  • USD/CNH: +0.2% to 7.1904
  • USD/JPY: +1.2% to 141.79
• The Week Ahead:
  • Monday: July Preliminary S&P Global US Manufacturing PMI and Preliminary S&P Global Services PMI
  • Tuesday: May FHFA Housing Price Index; May S&P Case-Shiller Home Price Index; July Consumer Confidence
  • Wednesday: MBA Mortgage Applications Index; June New Home Sales; EIA Crude Oil Inventories; FOMC Meeting
  • Thursday: Weekly Initial and Continuing Jobless Claims; Adv. Q2 GDP; June Durable Goods Orders; June Adv. Intl. trade in Goods, Adv. Retail inventories, and Adv. Wholesale Inventories; June Pending Home Sales; EIA Natural Gas Inventories
  • Friday: June Personal Income and Spending; Q2 Employment Cost Index; July Final Univ. of Michigan Consumer Sentiment Index