Bond Market Update

Bounce in Progress

• U.S. Treasuries are on track to recover some of their losses from Monday after a quiet advance in the overnight futures market. Treasury futures began inching higher last evening, staying on an upward path into the night. The market reached its best levels near the end of the Asian session, followed by a shallow dip from highs during the past few hours. The economic data flow slowed today, but it is worth noting that continued pressure on the Japanese yen sent the currency to its lowest level against the dollar since late 1986. Elsewhere, several European Central Bank officials made comments at the Sintra conference in Portugal, but the remarks were in line with expectations, as policymakers repeated that there is no pre-set rate path while President Lagarde said that a soft landing is not guaranteed. Economic data during the U.S. session will be limited to the 10:00 ET release of May job openings (prior 8.059 mln). Crude oil is continuing its show of strength, rising to $84/bbl, while the U.S. Dollar Index is up 0.1% at 105.95.
• Yield Check:
  • 2-yr: -2 bps to 4.75%
  • 3-yr: -3 bps to 4.56%
  • 5-yr: -3 bps to 4.41%
  • 10-yr: -3 bps to 4.45%
  • 30-yr: -2 bps to 4.62%

• News:
  • There was some speculation that the People's Bank of China could lower its reserve requirement ratio due to a growing supply of bonds.
  • The latest policy Minutes from the Reserve Bank of Australia showed that policymakers see inflation as consistent with returning to target in 2026.
  • German industrial conglomerate Siemens plans to hire 10,000 new employees in its electricity division.
  • Japan's June Monetary Base was up 0.6% yr/yr (expected 1.0%; last 0.9%).
  • South Korea's June CPI was down 0.2% m/m (expected 0.1%; last 0.1%) but up 2.4% yr/yr (expected 2.7%; last 2.7%).
  • Hong Kong's May Retail Sales fell 11.5% yr/yr (last -14.7%).
  • New Zealand's May Building Consents were down 1.7% m/m (last -2.1%). Q2 NZIER Business Confidence was down 44% (last -25%).
  • Eurozone's June CPI was up 0.2% m/m (last 0.2%), rising 2.5% yr/yr, as expected (last 2.6%). June Core CPI was up 0.3% m/m (last 0.4%), rising 2.9% yr/yr (expected 2.8%; last 2.9%). May Unemployment Rate remained at 6.4%, as expected.
  • Italy's May Unemployment Rate remained at 6.8% (expected 6.9%).
  • Spain's June Unemployment decreased by 46,800 (expected -50,900; last -58,700).
• Commodities:
  • WTI Crude: +0.7% to $83.99/bbl
  • Gold: -0.4% to $2330.50/ozt
  • Copper: +0.5% to $4.44/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0723
  • GBP/USD: +0.1% to 1.2653
  • USD/CNH: +0.1% to 7.3074
  • USD/JPY: +0.1% to 161.62
• Data out Today:
  • 10:00 ET: May job openings (prior 8.059 mln)