Bond Market Update

Inching Lower

• U.S. Treasuries are on track for a modestly lower start after a quiet night in the futures market. Treasury futures followed yesterday's subdued session with a slow overnight retreat that began taking shape in early evening action and produced lows as the focus shifted to Europe. The market did not receive any significant data while the news flow has also been light. Still, it is worth noting that the Bank of Japan's meeting with bond market participants produced a suggestion to reduce monthly purchases. The U.S. session will also be free of economic data, but Fed Chairman Powell will testify before the Senate Banking Committee at 10:00 ET and the U.S. Treasury will sell $58 bln in 3-yr notes at 13:00 ET. Crude oil is adding to yesterday's loss while the U.S. Dollar Index is up 0.1% at 105.11.
• Yield Check:
  • 2-yr: +2 bps to 4.64%
  • 3-yr: +3 bps to 4.43%
  • 5-yr: +3 bps to 4.26%
  • 10-yr: +3 bps to 4.30%
  • 30-yr: +2 bps to 4.48%

• News:
  • China's auto-related exports to countries that are part of the Belt & Road Initiative were up 13.3% yr/yr during the first five months of 2024.
  • Bank of Korea Governor Rhee testified in parliament that he expects the disinflationary trend to continue.
  • New Zealand's Treasury warned that weak economic indicators suggest that a contraction took place in Q2. 
  • European Central Bank policymaker Panetta said that the central bank can gradually cut rates.
  • Italy's economy minister Giorgetti said that domestic growth could reach 0.9% this year.
  • Japan's June M2 Money Stock 1.5% yr/yr (expected 2.0%; last 1.9%). May Machine Tool Orders 9.7% yr/yr (last 4.2%).
  • Australia's July Westpac Consumer Sentiment was down 1.1% (last 1.7%). June NAB Business Confidence rose to 4 from -2 and Business Survey fell to 4 from 6.
• Commodities:
  • WTI Crude: -0.3% to $82.06/bbl
  • Gold: +0.1% to $2366.70/ozt
  • Copper: +0.1% to $4.623/lb
• Currencies:
  • EUR/USD: -0.1% to 1.0813
  • GBP/USD: -0.1% to 1.2799
  • USD/CNH: +0.1% to 7.2907
  • USD/JPY: +0.2% to 161.13
• Data out Today:
  • 6:00 ET: June NFIB Small Business Optimism (actual 91.5; prior 90.5)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results