Bond Market Update

Long End Set for Lower Start

• U.S. Treasuries are on track for a lower start in longer tenors while the short end is set for a flat open after outperforming last week. Treasury futures slumped out of the gate on Sunday evening, but recovered the bulk of their losses as the night went on. The early selling followed a Saturday evening attempt on former President Trump's life during a campaign stop in Pennsylvania. Mr. Trump suffered only a graze wound, but two supporters in the crowd were wounded and one was killed. The overnight selling in Treasury futures took place alongside a brief uptick in the dollar, but the greenback has given back the bulk of its overnight gain. Overseas, China reported weaker-than-expected growth for Q2 due in part to soft consumption while the European session has been quiet on the news front. The market will not receive any top-tier domestic data today, but Fed Chairman Powell will speak at the Economic Club of Washington at 12:30 ET, which could invite some intraday volatility. Crude oil holds a slim loss while the U.S. Dollar Index is up 0.1% at 104.16.
• Yield Check:
  • 2-yr: UNCH at 4.46%
  • 3-yr: +1 bp to 4.24%
  • 5-yr: +3 bps to 4.14%
  • 10-yr: +5 bps to 4.24%
  • 30-yr: +7 bps to 4.47%

• News:
  • China's third plenum began today and will continue through Thursday, but expectations for major policy shifts are low.
  • The leader of France's audit court said that the country's deficit level is unacceptable.
  • Bank of England policymaker Dhingra said that the time is right for starting the rate normalization process.
  • Luxury goods manufacturer Burberry forecast a loss for the first half of 2024.
  • Airbus raised its demand forecast for the year.
  • China's June House Prices were down 4.5% yr/yr (last -3.9%). Q2 GDP expanded 0.7% qtr/qtr (expected 1.1%; last 1.5%), growing 4.7% yr/yr (expected 5.1%; last 5.3%). June Fixed Asset Investment rose 3.9% yr/yr, as expected (last 4.0%), June Industrial Production was up 5.3% yr/yr (expected 4.9%; last 5.6%), and June Retail Sales rose 2.0% yr/yr (expected 3.3%; last 3.7%). June Unemployment Rate remained at 5.0%, as expected.
  • South Korea's June trade surplus reached $7.99 bln (last surplus of $8.00 bln) as imports fell 7.5% yr/yr (last -7.5%) and exports rose 5.1% yr/yr (last 5.1%).
  • India's June trade deficit reached $20.98 bln (last deficit of $23.78 bln). June WPI Inflation was up 3.36% (expected 3.50%; last 2.61%).
  • Eurozone's May Industrial Production contracted 0.6% m/m (expected -0.9%; last -0.1%), falling 2.9% yr/yr (last -3.1%).
  • Swiss June PPI was unchanged m/m (expected 0.1%; last -0.3%), falling 1.9% yr/yr (last -1.8%).
• Commodities:
  • WTI Crude: -0.1% to $82.09/bbl
  • Gold: +0.1% to $2423.00/ozt
  • Copper: -0.7% to $4.561/lb
• Currencies:
  • EUR/USD: UNCH at 1.0907
  • GBP/USD: -0.1% to 1.2977
  • USD/CNH: UNCH at 7.2721
  • USD/JPY: +0.1% to 158.03
• Data out Today:
  • 8:30 ET: July Empire State Manufacturing survey (Briefing.com consensus -6.0; prior -6.0)