Bond Market Update

Sitting Tight

• U.S. Treasuries saw a fairly quiet overnight trade, holding to tight trading ranges that were influenced mainly by monetary policy considerations. The PBOC left its 1-yr and 5-yr loan prime rates unchanged at 3.35% and 3.85%, as expected; the Reserve Bank of Australia meeting minutes indicated a rate cut in the short term is unlikely; Sweden's Riskbank cut by 25 bps to 3.50% and said 2-3 more cuts could happen this year if the inflation outlook remains the same; and ECB member Rehn suggested growth risks raise the prospect of an ECB rate cut at the September meeting. There was nothing policy related out of the U.S., but that will change Wednesday with the release of benchmark revisions for nonfarm payrolls and the minutes for the July 30-31 FOMC meeting. The U.S. Dollar Index is flat at 101.84 after hitting its lowest level yesterday since January 2.
• Yield Check:
  • 2-yr: -2 bps to 4.05%
  • 3-yr: -2 bps to 3.85%
  • 5-yr: -2 bps to 3.74%
  • 10-yr: -1 bps to 3.86%
  • 30-yr: unch at 4.12%

• News:
  • The PBOC left its 1-yr and 5-yr loan prime rates unchanged at 3.35% and 3.85%, respectively
  • ECB member Rehn suggested growth risks raise the prospect of a rate cut in September
  • The Reserve Bank of Australia meeting minutes, meanwhile, showed members were aligned primarily with the idea that it is unlikely a rate cut will happen in the short term
  • Sweden's Riksbank cut its key policy rate by 25 basis points to 3.50%, as expected, and said 2-3 more rate cuts could be seen this year if the inflation outlook remains the same
  • Former President Trump says he will comment on monetary policy, but he will not force the Fed to listen to him, according to Bloomberg
  • Former President Trump says he might ask Congress to end $7500 EV tax credit, according to Reuters
  • Eurozone's July CPI 0.0% (expected 0.0%; last 0.2%) and 2.6% yr/yr (expected 2.6%; last 2.5%); July Core CPI -0.2% m/m (expected -0.2%; last 0.4%) and 2.9% yr/yr (expected 2.9%; last 2.9%)
• Commodities: 
  • WTI crude: -0.1% to $74.30/bbl
  • Gold: +0.9% to $2564.10/ozt 
  • Copper: +0.4% to $4.20/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1077
  • GBP/USD: +0.1% to 1.2999
  • USD/CNH: +0.1% to 7.1423
  • USD/JPY: -0.1% to 146.47
• The Day Ahead:
  • There is no U.S. economic data of note today
  • 1:35 p.m. ET: Atlanta Fed President Bostic (FOMC voter)
  • 2:45 p.m. ET: Fed Vice Chair for Supervision Michael Barr (FOMC voter)