Bond Market Update

Long End Ahead

• U.S. Treasuries are on track to begin Tuesday just above their flat lines with longer tenors expected to show an early continuation of yesterday's relative strength. Treasury futures spent the bulk of the night in a narrow range, slipping to lows shortly after the focus turned to action in Europe. The brief early-morning dip was followed by a quick reversal that lifted futures to fresh highs. Overnight action saw the release of a modest dose of data that had a limited impact on markets. Sentiment surrounding European equities has been pressured by reduced guidance from Airbus while U.S. stocks are on track for a higher start after their recent dip from record levels. Crude oil is giving back some of yesterday's gain while the U.S. Dollar Index is up 0.1% at 105.62.
• Yield Check:
  • 2-yr: -1 bp to 4.72%
  • 3-yr: -2 bps to 4.45%
  • 5-yr: -3 bps to 4.24%
  • 10-yr: -4 bps to 4.21%
  • 30-yr: -3 bps to 4.35%

• News:
  • The Chinese government is willing to offer perks to German carmakers to prevent the EU's planned implementation of tariffs on imported electric vehicles.
  • China's Premier Li expressed confidence that the domestic economy will grow about 5.0%.
  • Big Chinese telecom companies are reportedly being probed by the Biden administration.
  • Moody's does not expect Japan to reach its FY25 budget target.
  • Latest polls from France suggest that Marine Le Pen's party remains on track to gain about 36% of the vote in the first round while President Macron's party is polling around 20.5%.
  • Japan's June Corporate Price Services Index was up 2.5% yr/yr (expected 3.0%; last 2.7%). April BoJ Core CPI was up 2.1% yr/yr (expected 1.9%; last 1.8%). May Leading Index fell to 110.9 from 112.2 (expected 111.6) and Coincident Indicator was up 1.0% m/m, as expected (last 2.1%).
  • South Korea's June Consumer Confidence rose to 100.9 from 98.4.
  • Hong Kong's May trade deficit reached $12.1 bln (last deficit of $10.0 bln) as imports rose 9.6% m/m (last 3.7%) and exports increased 14.8% m/m (last 11.9%).
  • Australia's June Westpac Consumer Sentiment was up 1.7% (last -0.3%).
  • Spain's Q1 GDP expanded 0.8% qtr/qtr (expected 0.7%; last 0.7%), growing 2.5% yr/yr (expected 2.4%; last 2.4%). May PPI was down 4.6% yr/yr (last -6.7%).
• Commodities:
  • WTI Crude: -0.9% to $80.94/bbl
  • Gold: -0.1% to $2343.00/ozt
  • Copper: -0.7% to $4.405/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0710
  • GBP/USD: UNCH at 1.2683
  • USD/CNH: +0.1% to 7.2861
  • USD/JPY: -0.1% to 159.45
• Data out Today:
  • 9:00 ET: April FHFA Housing Price Index (prior 0.1%) and April S&P Case-Shiller Home Price Index (Briefing.com consensus 6.9%; prior 7.4%)
  • 10:00 ET: June Consumer Confidence (Briefing.com consensus 100.0; prior 102.0)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results