Bond Market Update

Dipping From July Highs

• U.S. Treasuries are on track for a lower start with longer tenors expected to show some relative weakness in the early going. Treasury futures began dipping in early evening trade, remaining pressured as the night went on. The market bounced briefly during the early portion of the European session before sliding to fresh lows during the past couple hours. The night was relatively quiet, even though China concluded its Third Plenum. The meeting ended with a pledge to build a high-level socialist market economic system over the next ten years while a full media briefing will be held tomorrow. The market is awaiting the European Central Bank's latest policy announcement at 8:15 ET, which is not expected to feature a rate cut, but President Lagarde is likely to set the stage for a cut at the following meeting. Crude oil is hanging onto yesterday's gain while the U.S. Dollar Index is up 0.1% at 103.85, trimming this week's loss to 0.3%.
• Yield Check:
  • 2-yr: +3 bps to 4.46%
  • 3-yr: +3 bps to 4.23%
  • 5-yr: +4 bps to 4.11%
  • 10-yr: +3 bps to 4.18%
  • 30-yr: +4 bps to 4.40%

• News:
  • Boeing (BA) workers in Seattle authorized a strike.
  • Former Bank of Japan director Hayakawa said that he does not expect a rate hike later this month.
  • EU Commission President von der Leyen shared a plan to build a "true European defense union" during her new five-year term.
  • Japan's June trade surplus reached JPY224.0 bln (expected deficit of JPY240.0 bln; last deficit of JPY1.22 trln) as imports grew 3.2% yr/yr (expected 9.3%; last 9.5%) and exports rose 5.4% yr/yr (expected 6.4%; last 13.5%).
  • Hong Kong's June Unemployment Rate remained at 3.0%.
  • Australia's June Employment increased by 50,200 (expected 19,900; last 39,500) and full employment increased by 43,300 (last 41,300). June Unemployment Rate rose to 4.1% from 4.0%, as expected, and Participation Rate ticked up to 66.9% from 66.8% (expected 66.8%). NAB Quarterly Business Confidence rose to -1 from -2.
  • U.K.'s May Average Earnings Index + Bonus rose 5.7% yr/yr, as expected (last 5.9%). May three-month employment increased by 19,000 (expected 18,000; last -140,000), and May Unemployment Rate remained at 4.4%, as expected. June Claimant Count increased by 32,300 (expected 23,400; last 51,900).
  • Swiss June trade surplus reached CHF6.18 bln (expected surplus of CHF5.05 bln; last surplus of CHF5.79 bln).
• Commodities:
  • WTI Crude: -0.1% to $82.73/bbl
  • Gold: +0.3% to $2468.10/ozt
  • Copper: -1.7% to $4.334/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0927
  • GBP/USD: -0.2% to 1.2980
  • USD/CNH: -0.1% to 7.2669
  • USD/JPY: +0.2% to 156.49
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 225,000; prior 222,000), Continuing Claims (prior 1.852 mln), and July Philadelphia Fed survey (Briefing.com consensus 2.9; prior 1.3)
  • 10:00 ET: June Leading Indicators (Briefing.com consensus -0.3%; prior -0.5%)
  • 10:30 ET: Weekly natural gas inventories (prior +65 bcf)
  • 16:00 ET: May Net Long-Term TIC Flows (prior $123.1 bln)