Bond Market Update

Steady Ahead of June Income Data

• U.S. Treasuries are on track for a modestly higher start ahead of the 8:30 ET release of the Personal Income/Outlays report for June, which will factor into the market's rate expectations. Treasury futures spent the night in a narrow range, revisiting yesterday's intraday lows at the end of the Asian session before a bounce to highs. Investor sentiment improved a touch with most global equity markets rising, but it is worth noting that continued demand for Chinese debt drove yields on China's shorter tenors to levels last seen at the depth of the coronavirus pandemic while the 10-yr yield slipped to levels not seen in over 20 years, hitting a low of 2.107%. Crude oil is giving back some of yesterday's advance while the U.S. Dollar Index is little changed at 104.39, remaining near its 200-day moving average (104.34).
• Yield Check:
  • 2-yr: UNCH at 4.44%
  • 3-yr: -1 bp to 4.25%
  • 5-yr: -2 bps to 4.13%
  • 10-yr: -2 bps to 4.24%
  • 30-yr: -2 bps to 4.48%

• News:
  • The Chinese government plans CNY300 bln in special bonds for a trade-in program for old industrial and household appliances.
  • The Monetary Authority of Singapore made no changes to its policy stance.
  • The Central Bank of Russia raised its policy rate 200 basis points to 18.00%, as expected.
  • German steelmaker Thyssenkrupp lowered its revenue guidance for the year.
  • The Bank of England will meet next week and the expectations for a rate cut are now essentially a toss-up.
  • The U.K. is looking at a GBP19 bln budget gap.
  • Japan's July Tokyo CPI was up 2.2% yr/yr (expected 2.3%; last 2.3%) and Tokyo Core CPI was up 2.2% yr/yr, as expected (last 2.1%). May Leading Index rose to 111.2 from 110.9 (expected 111.1) and Coincident Indicator was up 1.9% m/m (expected 1.3%; last 1.0%).
  • Singapore's Q2 URA Property Index rose 0.9% qtr/qtr (expected 1.1%; last 1.4%). June Industrial Production fell 3.8% m/m (expected -0.5%; last 0.5%), decreasing 3.9% yr/yr (expected 0.0%; last 2.3%).
  • France's July Consumer Confidence rose to 91 from 90 (expected 90).
  • Italy's July Consumer Confidence rose to 98.9 from 98.3 (expected 98.0) and Business Confidence rose to 87.6 from 86.9 (expected 87.0).
  • Spain's June Retail Sales rose 0.3% yr/yr (last 0.2%). Q2 Unemployment Rate fell to 11.27% from 12.3% (expected 11.4%).
• Commodities:
  • WTI Crude: -0.3% to $78.05/bbl
  • Gold: +0.9% to $2373.50/ozt
  • Copper: +0.3% to $4.139/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0859
  • GBP/USD: +0.1% to 1.2866
  • USD/CNH: +0.3% to 7.2622
  • USD/JPY: +0.5% to 154.70
• Data out Today:
  • 8:30 ET: June Personal Income (Briefing.com consensus 0.4%; prior 0.5%), Personal Spending (Briefing.com consensus 0.3%; prior 0.2%), PCE Prices (Briefing.com consensus 0.1%; prior 0.0%), and core PCE Prices (Briefing.com consensus 0.2%; prior 0.1%)
  • 10:00 ET: Final July University of Michigan Consumer Sentiment (Briefing.com consensus 66.0; prior 66.0)