Bond Market Update

Inching Lower After Quiet Night

• U.S. Treasuries are on track for a slightly lower start after facing some light overnight pressure in the futures market. Treasury futures inched higher in early evening action but found resistance near the start of the Asian session. The pressure persisted into the early portion of the European session with action stabilizing near yesterday's intraday lows. The night was very quiet on the data front with Eurozone's May CPI staying unrevised while the region's latest economic sentiment survey beat estimates despite a poor showing from Germany. The U.S. session will feature the May Retail Sales report (Briefing.com consensus 0.3%; prior 0.6%) at 8:30 ET, followed by May Industrial Production (Briefing.com consensus 0.4%; prior 0.0%) at 9:15 ET, and the U.S. Treasury's $13 bln 20-yr bond reopening at 13:00 ET. Crude oil is hovering near its 50-day moving average (79.98) while the U.S. Dollar Index is up 0.2% at 105.56.
• Yield Check:
  • 2-yr: +1 bp to 4.77%
  • 3-yr: +1 bp to 4.51%
  • 5-yr: +1 bp to 4.31%
  • 10-yr: +1 bp to 4.29%
  • 30-yr: UNCH at 4.41%

• News:
  • Fed Chairman Powell will appear at the semiannual monetary policy testimony on July 9 and 10.
  • China's Premier Li expressed hope for improved relations with Australia.
  • There was speculation that the People's Bank of China will not make any changes to its loan prime rate this month.
  • China's National Development and Reform Commission noted that demand for electric vehicles has continued growing at a fast pace.
  • Hong Kong's exchange will stop imposing trading halts due to extreme weather.
  • The Reserve Bank of Australia left its cash rate at 4.35%, as expected.
  • EU leaders failed to agree on appointments for top posts at the European Commission, European Council, and the foreign ministry, but they will continue debating next week.
  • Singapore's May trade surplus reached $4.563 bln (last surplus of $4.516 bln) as non-oil exports dipped 0.1% m/m (expected 1.7%; last 7.3%) and 0.1% yr/yr (expected -0.9%; last -9.6%).
  • Eurozone's May CPI was up 0.2% m/m, as expected (last 0.6%), rising 2.6% yr/yr, as expected (last 2.4%). May Core CPI was up 0.4% m/m, as expected (last 0.7%), rising 2.9% yr/yr, as expected (last 2.7%). June ZEW Economic Sentiment hit 51.3 (expected 47.8; last 47.0).
  • Germany's June ZEW Economic Sentiment hit 47.5 (expected 49.6; last 47.1) and Current Conditions fell to -73.8 from -72.3 (expected -65.0).
• Commodities:
  • WTI Crude: +0.1% to $80.38/bbl
  • Gold: -0.1% to $2325.80/ozt
  • Copper: -1.5% to $4.381/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0715
  • GBP/USD: -0.2% to 1.2672
  • USD/CNH: +0.1% to 7.2759
  • USD/JPY: +0.2% to 158.07
• Data out Today:
  • 8:30 ET: May Retail Sales (Briefing.com consensus 0.3%; prior 0.6%), Retail Sales ex-auto (Briefing.com consensus 0.2%; prior -0.1%)
  • 9:15 ET: May Industrial Production (Briefing.com consensus 0.4%; prior 0.0%) and Capacity Utilization (Briefing.com consensus 78.5%; prior 78.4%)
  • 10:00 ET: April Business Inventories (Briefing.com consensus 0.3%; prior -0.1%)
  • 16:00 ET: April net Long-Term TIC Flows (prior $100.5 bln)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results