Bond Market Update

Quiet Start Ahead

• U.S. Treasuries are on track for a flat start after yesterday's slight outperformance in longer tenors. Treasury futures saw very little overnight movement, spending the first half of the night in a sideways range, followed by a push to highs during the early portion of the European session. The market received a sizable batch of data, which included above-consensus flash Q2 GDP readings from Spain and France while Germany missed estimates, reporting a slight contraction. Economic data during the U.S. session will include the 10:00 ET release of the Consumer Confidence (Briefing.com consensus 99.8; prior 100.4) report for July. As a reminder, the U.S. Treasury announced after yesterday's close that it expects to borrow $740 bln in Q3, $106 bln less than anticipated in April. Q4 borrowing is expected to reach $565 bln. Crude oil remains at its lowest level since early June while the U.S. Dollar Index is up 0.1% at 104.61.
• Yield Check:
  • 2-yr: UNCH at 4.39%
  • 3-yr: +1 bp to 4.21%
  • 5-yr: UNCH at 4.07%
  • 10-yr: -1 bp to 4.17%
  • 30-yr: UNCH at 4.43%

• News:
  • The Bank of Japan will release its latest policy statement overnight and there is still some speculation that a rate hike and a plan to reduce bond purchases could be announced.
  • Japan's Economic Council called on the Bank of Japan and the government to be mindful of yen weakness when guiding policy.
  • Citigroup lowered its 2024 growth forecast for China to 4.8% from 5.0%.
  • British Chancellor Reeves said that she is planning GBP5.5 bln worth of spending cuts to narrow a budget gap.
  • China's June FDI was down 29.1% YTD (last -28.2%). · Japan's June Unemployment Rate dipped to 2.5% from 2.6% (expected 2.6%) and jobs/applications ratio fell to 1.23 from 1.24 (expected 1.24).
  • Australia's June Building Approvals decreased 6.5% m/m (expected -2.1%; last 5.7%) but were up 9.8% yr/yr (last 15.0%). June Private House Approvals fell 0.5% m/m (last 1.9%).
  • Eurozone's flash Q2 GDP expanded 0.3% qtr/qtr (expected 0.2%; last 0.3%), growing 0.6% yr/yr, as expected (last 0.4%). July Business and Consumer Survey dipped to 95.8 from 95.9 (expected 95.4).
  • Germany's flash Q2 GDP contracted 0.1% qtr/qtr (expected 0.1%; last 0.2%), decreasing 0.1% yr/yr (expected 0.0%; last -0.2%). Flash July CPI was up 0.3% m/m, as expected (last 0.1%), rising 2.3% yr/yr (expected 2.2%; last 2.2%).
  • France's flash Q2 GDP expanded 0.3% qtr/qtr (expected 0.2%; last 0.3%), growing 1.1% yr/yr (last 1.5%). June Consumer Spending was down 0.5% m/m (expected -0.2%; last 0.8%).
  • Italy's Q2 GDP expanded 0.2% qtr/qtr, as expected (last 0.3%), growing 0.9% yr/yr (expected 0.8%; last 0.6%).
  • Spain's flash Q2 GDP expanded 0.8% qtr/qtr (expected 0.5%: last 0.8%). July CPI was down 0.5% m/m (last 0.4%) but up 2.8% yr/yr (expected 3.0%; last 3.4%). July Core CPI was up 2.8% yr/yr (last 3.0%). July Business Confidence ticked up to -4.2 from -5.7.
  • Swiss July KOF Leading Indicators fell to 101.0 from 102.7 (expected 102.6).
• Commodities:
  • WTI Crude: -0.7% to $75.25/bbl
  • Gold: +0.3% to $2385.10/ozt
  • Copper: -1.0% to $4.045/lb
• Currencies:
  • EUR/USD: UNCH at 1.0824
  • GBP/USD: -0.1% to 1.2845
  • USD/CNH: -0.1% to 7.2664
  • USD/JPY: +0.6% to 154.89
• Data out Today:
  • 9:00 ET: May FHFA Housing Price Index (prior 0.2%) and May S&P Case-Shiller Home Price Index (Briefing.com consensus 6.8%; prior 7.2%)
  • 10:00 ET: July Consumer Confidence (Briefing.com consensus 99.8; prior 100.4) and June job openings (prior 8.140 mln)