Bond Market Update

Quiet Start Ahead

• U.S. Treasuries are on track for a flat start after a rangebound night in the futures market. Treasury futures inched lower last evening, adding to their slight losses as the night went on. The market reached lows shortly after the start of the European session, remaining near those levels at this juncture. Overnight action saw a mixed showing from equities in Asia, followed by a more positive session in Europe. Sovereign debt, meanwhile, has seen little overall movement. That could change during the U.S. session when the market receives revised monthly nonfarm payroll growth figures from the Bureau of Labor Statistics at 10:00 ET, which are expected to show weaker growth. Later in the day, the U.S. Treasury will sell $16 bln in 20-yr bonds. Crude oil holds a modest gain while the U.S. Dollar Index is up 0.1% at 101.55.
• Yield Check:
  • 2-yr: UNCH at 3.99%
  • 3-yr: -1 bp to 3.79%
  • 5-yr: -1 bp to 3.69%
  • 10-yr: -1 bp to 3.81%
  • 30-yr: UNCH at 4.07%

• News:
  • China Securities Journal speculated that the People's Bank of China could lower the seven-day reverse repurchase rate by up to 20 basis points in Q4.
  • China may permit local governments to buy homes with funds raised through bond sales.
  • South Korea's exports through the first 20 days of August were up 18.5% with chip exports rising 42.5%.
  • Fitch affirmed New Zealand's AA+ rating with a Stable outlook.
  • Hungary expects 2024 domestic growth of about 2%, which would be on the lower end of the previous forecast.
  • Japan's July trade deficit reached JPY760 bln (expected deficit of JPY720 bln; last deficit of JPY820 bln) as imports rose 16.6% yr/yr (expected 14.9%; last 3.2%) and exports grew 10.3% yr/yr (expected 11.4%; last 5.4%).
  • South Korea's July PPI was up 0.3% m/m (last -0.1%), rising 2.6% yr/yr (last 2.5%).
  • Australia's July MI Leading Index was unchanged m/m (last 0.0%).
  • New Zealand's July Credit Card Spending was down 3.8% yr/yr (last -3.1%).
  • U.K.'s July Public Sector Net Borrowing reached GBP2.18 bln (expected GBP500 mln; last GBP12.55 bln).
• Commodities:
  • WTI Crude: +0.1% to $73.25/bbl
  • Gold: UNCH at $2551.30/ozt
  • Copper: +0.8% to $4.193/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1115
  • GBP/USD: UNCH at 1.3031
  • USD/CNH: +0.2% to 7.1303
  • USD/JPY: +0.6% to 146.03
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -10.1%; prior 16.8%) 
  • 10:30 ET: Weekly crude oil inventories (prior +1.36 mln)
• Treasury Auctions:
  • 13:00 ET: $16 bln 20-yr Treasury bond auction results