Bond Market Update

Eye on Horizon

• U.S. Treasuries have started the week on a steady footing, waiting patiently for some key happenings later in the week that will have market-moving implications. The first is Wednesday's release by the BLS of benchmark revisions to nonfarm payrolls for the April 2023-March 2024 period. The second is Fed Chair Powell's speech on the Economic Outlook at the Jackson Hole Economic Symposium on Friday. In weekend interviews, San Francisco Fed President Daly (FOMC voter) said the Fed should gradually reduce rates and Minneapolis Fed President Kashkari (non-FOMC voter) said a weaker employment market could trigger a rate cut. Initial jobless claims and existing home sales (Thursday) and new home sales (Friday) will be focal points on the economic calendar. Separately, the U.S. Dollar Index is tracking lower (-0.2% to 102.21) with both the euro and the yen exhibiting strength against the greenback.
• Yield Check:
  • 2-yr: -1 bp to 4.05%
  • 3-yr: -1 bp to 3.86%
  • 5-yr: -1 bp to 3.76%
  • 10-yr: -1 bps to 3.88%
  • 30-yr: -2 bps to 4.13%

• News:
  • Democratic National Convention begins today in Chicago
  • San Francisco Fed President Mary Daly (FOMC voter) in interview says Fed should gradually reduce rates, according to FT
  • Minneapolis Fed President Neel Kashkari (non-FOMC voter) in interview says a weaker employment market could trigger Fed rate cut, according to The Wall Street Journal
  • Goldman Sachs economists lower US recession expectations over the next 12 months to 20% from 25%, according to Bloomberg
  • US confident in ceasefire proposal, but Hamas is expected to reject the "bridging proposal," according to Politico
  • BHP (BHP) workers have accepted proposal and strike at Chile mine has ended, according to Bloomberg
  • Potential Canadian railway strike this week could impact supply chains, according to CBS News
  • Japan's June Core Machinery Orders 2.1% m/m (expected 0.9%; last -3.2%) and -1.7% yr/yr (expected 1.8%; last 10.8%)
• Commodities: 
  • WTI crude: -0.9% to $75.96/bbl
  • Gold: -0.5% to $2526.10/ozt 
  • Copper: +1.0% to $4.18/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1035
  • GBP/USD: +0.1% to 1.2951
  • USD/CNH: -0.2% to 7.1647
  • USD/JPY: -0.9% to 146.23
• The Day Ahead:
  • 10:00 ET: July Leading Indicators (Briefing.com consensus -0.3%; prior -0.2%)