Bond Market Update

Inching Higher Ahead of PPI

• U.S. Treasuries are on track for a slightly higher start ahead of the 8:30 ET release of July PPI (Briefing.com consensus 0.1%; prior 0.2%) and Core PPI (Briefing.com consensus 0.2%; prior 0.4%). Treasury futures began inching down in early evening action, staying on a slight downward path into the night. The market reached lows around 6:00 ET, followed by a rebound that sent action to fresh highs. Economic data released overnight included below-consensus July social financing figures from China and an unexpected decrease in the U.K.'s unemployment rate, which is weighing on Bank of England rate expectations. Crude oil is giving back a slight portion of yesterday's rally while the U.S. Dollar Index is flat at 103.14.
• Yield Check:
  • 2-yr: -3 bps to 3.99%
  • 3-yr: -3 bps to 3.80%
  • 5-yr: -3 bps to 3.72%
  • 10-yr: -2 bps to 3.89%
  • 30-yr: -1 bp to 4.19%

• News:
  • Japan will hold a special session of parliament next Friday to discuss the Bank of Japan's rate hike.
  • Grocery store inflation in the U.K. accelerated for the first time since March 2023.
  • Germany's Economy Minister Habeck said that rate cuts from the European Central Bank will help the construction industry.
  • Economists from Germany's ZEW noted that economic expectations remain pressured by high uncertainty.
  • China's July New Loans reached CNY260.0 bln (expected CNY1.28 trln; last CNY2.13 trln) and total social financing reached CNY770.0 bln (expected CNY1.10 trln; last CNY3.30 trln). July Outstanding Loans grew 8.7% yr/yr (expected 8.8%; last 8.8%).
  • Japan's July PPI was up 0.3% m/m (last 0.2%), rising 3.0% yr/yr, as expected (last 2.9%). July Machine Tool Orders rose 8.4% yr/yr (last 9.7%).
  • South Korea's July Import Price Index was up 9.8% yr/yr (last 9.6%) and Export Price Index was up 12.9% yr/yr (lats 12.1%).
  • Singapore's Q2 GDP expanded 0.4% qtr/qtr, as expected (last 0.4%), growing 2.9% yr/yr, as expected (last 3.0%).
  • Australia's August Westpac Consumer Sentiment increased 2.8% (expected 0.5%; last -1.1%). Q2 Wage Price Index was up 0.8% qtr/qtr (expected 0.9%; last 0.9%), rising 4.1% yr/yr (last 4.1%).
  • New Zealand's June Visitor Arrivals decreased 0.2% m/m (last 4.0%).
  • Eurozone's August ZEW Economic Sentiment hit 17.9 (expected 35.4; last 43.7).
  • Germany's August ZEW Economic Sentiment hit 19.2 (expected 32.6; last 41.8) and ZEW Current Conditions hit -77.3 (last -68.9).
  • U.K.'s June Average Earnings Index + Bonus rose 4.5% yr/yr (last 5.7%). July Claimant Count increased by 135,000 (expected 14,500; last 36,200). June three-month employment increased by 97,000 (last 19,000), and June Unemployment Rate fell to 4.2% from 4.4% (expected 4.5%).
  • Spain's July CPI was down 0.5% m/m, as expected (last 0.4%) but up 2.8% yr/yr, as expected (last 3.4%). July Core CPI was up 2.8% yr/yr, as expected (last 3.0%).
• Commodities:
  • WTI Crude: -0.5% to $79.67/bbl
  • Gold: UNCH at $2504.20/ozt
  • Copper: -0.6% to $4.044/lb
• Currencies:
  • EUR/USD: UNCH at 1.0930
  • GBP/USD: +0.2% to 1.2792
  • USD/CNH: -0.2% to 7.1646
  • USD/JPY: +0.2% to 147.38
• Data out Today:
  • 6:00 ET: July NFIB Small Business Optimism (actual 93.7; prior 91.5)
  • 8:30 ET: July PPI (Briefing.com consensus 0.1%; prior 0.2%) and Core PPI (Briefing.com consensus 0.2%; prior 0.4%)