Bond Market Update

Long End Leads

• U.S. Treasuries are on track for a higher start with longer tenors expected to show some relative strength in the early going after lagging on Friday. Treasury futures began rising last evening, staying on a steady upward path through the night. The advance took place alongside gains in other sovereign debt and a positive showing in most global equity markets. There was some renewed uncertainty surrounding this week's policy decision from the Bank of Japan, which could be a rate hike. Meanwhile, Japan's Ministry of Finance reportedly wants to see a gradual reduction in bond purchases by the BoJ. The market did not receive any top-tier data overnight and things will remain quiet on the economic front during the U.S. session, though the Treasury will release its quarterly borrowing estimate at 15:00 ET. Crude oil is under some pressure while the U.S. Dollar Index is up 0.2% at 104.56.
• Yield Check:
  • 2-yr: -3 bps to 4.36%
  • 3-yr: -3 bps to 4.17%
  • 5-yr: -4 bps to 4.04%
  • 10-yr: -5 bps to 4.15%
  • 30-yr: -5 bps to 4.41%

• News:
  • The Chinese government launched a program to support the development of small and medium-sized technology firms.
  • The Bank of England will meet this week and the market's expectations are leaning toward a rate cut.
  • Heineken's results showed weakness in June and July, which has weighed on distiller names.
  • Drugmaker Merck raised its guidance for the year.
  • China's June Industrial Profit was up 3.5% YTD (last 3.4%).
  • U.K.'s June BoE Consumer Credit reached GBP1.162 bln (last GBP1.494 bln), June Mortgage Approvals hit 59,980 (expected 60,000; last 60,130), June Mortgage Lending reached GBP2.65 bln (last GBP1.26 bln), and June Net Lending to Individuals reached GBP3.816 bln (expected GBP2.200 bln; last GBP2.800 bln). July CBI Distributive Trades Survey fell to -43 from -24 (expected -20).
  • Italy's June non-EU trade surplus reached EUR6.04 bln (last EUR5.91 bln).
• Commodities:
  • WTI Crude: -0.7% to $76.61/bbl
  • Gold: +0.3% to $2387.00/ozt
  • Copper: -1.0% to $4.083/lb
• Currencies:
  • EUR/USD: -0.4% to 1.0817
  • GBP/USD: -0.3% to 1.2826
  • USD/CNH: +0.1% to 7.2706
  • USD/JPY: +0.1% to 153.80
• No Data on Today's Schedule