Bond Market Update

Mixed Start Ahead

• U.S. Treasuries are on track for a mixed start with shorter tenors expected to show slight early weakness while the long end is on course for a higher open. The mixed pre-market showing follows a night that saw a rally in the futures market that was mostly reversed after the start of the European session. The international news flow was on the light side with the People's Bank of China unexpectedly lowering its one-year loan prime rate to 3.35% from 3.45% while the five-year rate was lowered to 3.85% from 3.95%, making for the first cut to these rates since August. In the U.S., President Biden announced via a message on X.com that he will not seek reelection and will endorse Vice President Harris. Crude oil is falling to its 50-day moving average (79.79) while the U.S. Dollar Index is down 0.2% at 104.24.
• Yield Check:
  • 2-yr: +1 bp to 4.52%
  • 3-yr: +1 bp to 4.29%
  • 5-yr: UNCH at 4.16%
  • 10-yr: -2 bps to 4.22%
  • 30-yr: -2 bps to 4.43%

• News:
  • The Bank of Japan's Minutes from the bond market group meeting two weeks ago showed an agreement that the central bank should set and announce the sizes for its bond purchases for the next two years at the upcoming policy meeting.
  • The British government will reportedly offer above-inflation pay hikes to teachers and nurses.
  • European Central Bank policymaker Kazimir said that there is potential for additional easing while policymaker Makhlouf said that there is no need to rush to make policy decisions.
  • Europe's top discount airline Ryanair missed quarterly expectations and issued soft guidance.
  • Hong Kong' June CPI was up 0.5% m/m (last -0.2%), rising 1.5% yr/yr (last 1.2%).
  • New Zealand's June trade surplus reached $699 mln (expected surplus of $294 mln; last surplus of $54 mln).
• Commodities:
  • WTI Crude: -0.4% to 79.81/bbl
  • Gold: +0.1% to $2401.70/ozt
  • Copper: -0.9% to $4.197/lb
• Currencies:
  • EUR/USD: UNCH at 1.0884
  • GBP/USD: +0.1% to 1.2923
  • USD/CNH: +0.1% to 7.2914
  • USD/JPY: -0.4% to 156.86
• No Data on Today's Schedule