Bond Market Update

Bounce Extended

• U.S. Treasuries are on track for a higher start after yesterday's holiday closure. Treasury futures started the overnight session on a flat note, holding steady into the latter part of the Asian session. The market began rising as the focus turned to Europe, reaching highs during the past couple hours. The overnight advance took place alongside gains in other sovereign debt while equity markets have had a mixed showing. Overnight action featured the release of a decent batch of economic data, including below-consensus May Industrial Production from Germany (-2.5%; expected 0.2%) and disappointing May Retail Sales from the eurozone (0.1%; expected 0.2%), though the year-over-year reading (0.3%; expected 0.1%) beat estimates. In other news, the British snap election produced a major defeat for the Conservative party, which was expected. Meanwhile, the second round of French elections will be completed this weekend. Economic data during the U.S. session will be limited to the 8:30 ET release of the Employment Situation report for June, which is expected to show the addition of 185,000 nonfarm payrolls. Crude oil is little changed while the U.S. Dollar Index is down 0.1% at 105.01.
• Yield Check:
  • 2-yr: -4 bps to 4.68%
  • 3-yr: -2 bps to 4.47%
  • 5-yr: -2 bps to 4.30%
  • 10-yr: -2 bps to 4.34%
  • 30-yr: -1 bp to 4.51%

• News:
  • President Biden said that he does not plan to cede his nomination.
  • China sold 30-yr special Treasury bonds and the People's Bank of China is reportedly preparing to sell hundreds of billions worth of bonds after the recent slide to record lows in yields.
  • New tariffs on imports of Chinese electric vehicles into the European Union took effect today.
  • Germany's ruling coalition has reportedly agreed on a draft budget for 2025.
  • Japan's May Household Spending was down 0.3% m/m (expected 0.5%; last -1.2%), falling 1.8% yr/yr (expected 0.2%; last 0.5%). May Leading Index rose to 111.1 from 110.9, as expected, and Coincident Indicator rose 1.3% m/m (last 1.0%).
  • South Korea's May Current Account surplus reached $8.92 bln (last deficit of $290 mln).
  • Singapore's May Retail Sales rose 2.4% m/m (last -2.6%), increasing 2.2% yr/yr (last -1.2%).
  • Eurozone's May Retail Sales ticked up 0.1% m/m (expected 0.2%; last -0.2%), rising 0.3% yr/yr (expected 0.1%; last 0.6%).
  • Germany's May Industrial Production was down 2.5% m/m (expected 0.2%; last 0.1%), falling 6.7% yr/yr (last -3.7%).
  • U.K.'s June Halifax House Price Index was down 0.2% m/m (expected 0.2%; last 0.0%) but up 1.6% yr/yr (last 1.6%).
  • France's May Industrial Production was down 2.1% m/m (expected -0.6%; last 0.6%). May trade deficit reached EUR8.0 bln (expected deficit of EUR7.2 bln; last deficit of EUR7.6 bln).
  • Swiss June SECO Consumer Climate ticked up to -37 from -38 (expected -35).
  • Italy's May Retail Sales rose 0.4% m/m (expected 0.2%; last -0.1%), increasing 0.4% yr/yr (last -1.7%).
  • Spain's May Industrial Production was up 0.4% yr/yr (expected 1.4%; last 0.2%). May Consumer Confidence hit 83.8 (last 84.5).
• Commodities:
  • WTI Crude: +0.1% to $83.93/bbl
  • Gold: +0.1% to $2371.90/ozt
  • Copper: +3.2% to $4.678/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0819
  • GBP/USD: +0.2% to 1.2784
  • USD/CNH: -0.1% to 7.2851
  • USD/JPY: -0.3% to 160.82
• Data out Today:
  • 8:30 ET: June Nonfarm Payrolls (Briefing.com consensus 185,000; prior 272,000), Nonfarm Private Payrolls (Briefing.com consensus 160,000; prior 229,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.4%), Unemployment Rate (Briefing.com consensus 4.0%; prior 4.0%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)