Bond Market Update

Quiet Start in Sight

• U.S. Treasuries are on track for a flat start after a night that saw reduced volume due to a limited flow of data and a Bank Holiday in the United Kingdom. Treasury futures inched higher last evening, reaching their best levels about two hours after the opening of the futures market. The trading range narrowed as the night went on, leaving futures just below their evening highs. Overnight action saw a mostly positive showing from Asian equities while European stocks trade closer to their flat lines. Sovereign debt, meanwhile, is mostly lower, but the losses have been slim. Economic data during the U.S. session will be limited to the 8:30 ET release of Durable Orders for July (Briefing.com consensus 4.0%; prior -6.6%) to start a week that will end with a Friday release of the Personal Income/Outlays report for July. Crude oil is building on its bounce from the past two days, assisted by news of a military confrontation between Israel and Hezbollah, while the U.S. Dollar Index is up 0.1% at 100.86.
• Yield Check:
  • 2-yr: UNCH at 3.91%
  • 3-yr: UNCH at 3.73%
  • 5-yr: UNCH at 3.65%
  • 10-yr: UNCH at 3.81%
  • 30-yr: UNCH at 4.10%

• News:
  • The People's Bank of China left its medium-term lending facility rate at 2.30%, as expected.
  • Australia's Treasurer Chalmers will travel to China, marking the first visit by an Australian treasurer in seven years.
  • New Zealand's Prime Minister Luxon said that a ban on offshore oil and gas exploration will be reversed to deal with a domestic energy security crisis. 
  • European Central Bank Chief Economist Lane said at the Jackson Hole Symposium that the return to the 2.0% inflation target is not yet secure.
  • Singapore's July Industrial Production was up 10.1% m/m (expected 5.3%; last -4.3%), rising 1.8% yr/yr (expected -1.1%; last -4.3%).
  • Germany's August ifo Business Climate Index hit 86.6 (expected 86.0; last 87.0). August Current Assessment fell to 86.5 from 87.1, as expected, and Business Expectations fell to 86.8 from 87.0 (expected 86.8).
  • Spain's July PPI was down 1.4% yr/yr (last -3.2%).
  • Swiss Q2 Employment rose to 5.499 mln from 5.481 mln.
• Commodities:
  • WTI Crude: +3.0% to $77.04/bbl
  • Gold: +0.5% to $2559.50/oz
  • Copper: +0.4% to $4.219/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1166
  • GBP/USD: -0.2% to 1.3190 
  • USD/CNH: +0.1% to 7.1221
  • USD/JPY: -0.2% to 144.13
• Data out Today:
  • 8:30 ET: July Durable Orders (Briefing.com consensus 4.0%; prior -6.6%) and Durable Orders ex-transport (Briefing.com consensus 0.1%; prior 0.5%)