Bond Market Update

Shift Work

• U.S. Treasuries enjoyed a solid outing in front of Wednesday's main events: the benchmark revisions for nonfarm payrolls for April 2023-March 2024 and the release of the minutes for the July 30-31 FOMC meeting. Yields fell across the curve, bolstered by the notion that many of the world's leading central banks -- and particularly the Federal Reserve -- are shifting (or soon will be) to a less restrictive policy stance. The impending shift for the Fed, which has held rates higher for longer than other central banks, continues to take a toll on the dollar, which lost ground against the euro, the yen, and pound sterling again today. The U.S. Dollar Index slipped 0.4% to 101.44, leaving it down 4.2% for the quarter.
• Yield Check:
  • 2-yr: -7 bps to 4.00%
  • 3-yr: -7 bps to 3.80%
  • 5-yr: -6 bps to 3.70%
  • 10-yr: -5 bps to 3.82%
  • 30-yr: -5 bps to 4.07%

• 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 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
  • Fed Governor Bowman (FOMC voter) says Fed needs to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point; should the incoming data continue to show that inflation is moving sustainably toward our 2 percent goal, it will become appropriate to gradually lower the federal funds rate
  • 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
  • Independent presidential candidate Robert F. Kennedy Jr. is considering ending his campaign and "joining forces" with former President Trump, according to CNBC
  • 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: -0.8% to $73.17/bbl
  • Gold: +0.4% to $2550.10/ozt 
  • Copper: -0.7% to $4.15/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1120
  • GBP/USD: +0.3% to 1.3029
  • USD/CNH: -0.2% to 7.1197
  • USD/JPY: -0.8% to 145.36
• The Day Ahead:
  • 07:00 ET: Weekly MBA Mortgage Applications Index (prior +16.8%)
  • 10:30 ET: EIA Crude Oil Inventories (prior +1.36M)
  • 13:00 ET: $16 billion 20-yr bond auction
  • 14:00 ET: July 30-31 FOMC Minutes