Bond Market Update

Recovery Effort

• U.S. Treasuries are in recovery mode following Thursday's sharp selling pressure. There hasn't been a specific news catalyst to account for the recovery effort, although there has been a notable decline in commodity prices, particularly oil. That standing is perhaps fueling some speculation that yesterday's economic optimism was overdone. Also, the yen is showing some renewed strength against the dollar after being weaker during the Japanese trading session. In any event, yields are lower across the curve in front of this morning's economic releases. July housing starts and building permits data will be released at 8:30 a.m. ET followed by the preliminary August University of Michigan Index of Consumer Sentiment at 10:00 a.m. ET, which will also feature year-ahead and long-run inflation expectations. USD/JPY -0.9% to 147.99.
• Yield Check:
  • 2-yr: -5 bps to 4.05%
  • 3-yr: -7 bps to 3.84%
  • 5-yr: -6 bps to 3.74%
  • 10-yr: -6 bps to 3.87%
  • 30-yr: -4 bps to 4.14%

• News:
  • Vice President Kamala Harris leads former President Trump by 1 point in average of latest polls, which is within the margin of error. Ms. Harris led by 1 point last week, according to RealClear Politics
  • Vice President Kamala Harris will call for construction of three million housing units and tax incentives for first time buyers, according to The Wall Street Journal
  • Reserve Bank of Australia Governor Bullock poured cold water on the idea of a near-term rate cut
  • PBOC Governor Pan said China will gradually shift away from quantitative targets and place a greater emphasis on the use of price-based tools like interest rates, according to Xinhua
  • Japan's foreign investment in Japanese stocks JPY521.9B (last -JPY643.7B)
  • U.K.'s July Retail Sales 0.5% m/m (expected 0.6%; last -0.9%) and 1.4% yr/yr (expected 1.4%; last -0.3%)
• Commodities: 
  • WTI crude: -3.1% to $75.78/bbl
  • Gold: +0.5% to $2503.70/ozt 
  • Copper: -1.0% to $4.11/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0992
  • GBP/USD: +0.4% to 1.2903
  • USD/CNH: -0.2% to 7.1658
  • USD/JPY: -0.9% to 147.99
• The Day Ahead:
  • 08:30 ET: July Housing Starts (Briefing.com consensus 1.350 mln; prior 1.353 mln) and Building Permits (Briefing.com consensus 1.440 mln; prior 1.446 mln)
  • 10:00 ET: Preliminary August University of Michigan Consumer Sentiment (Briefing.com consensus 66.7; prior 66.4)