Bond Market Update

Long End Lags

• U.S. Treasuries are on track for a lower start with longer tenors expected to pace the early selling after a quiet Monday session. Treasury futures began inching lower during the Asian session, adding to their losses as the night went on. The pace of the selling increased once the focus turned to Europe, leaving futures on their lows at this juncture. Overnight trade featured a mostly muted showing from global equity markets as anticipation builds ahead of NVIDIA's (NVDA) quarterly report that will be released after tomorrow's closing bell. The overnight data flow included the release of Germany's final GDP report for Q2, which was left unrevised at -0.1% qtr/qtr. Economic data during the U.S. session will be headlined by the 10:00 ET release of August Consumer Confidence (Briefing.com consensus 100.0; prior 100.3) and the U.S. Treasury will sell $69 bln in 2-yr notes at 13:00 ET. Crude oil is giving back some of its gains from the past three days while the U.S. Dollar Index is little changed at 100.81.
• Yield Check:
  • 2-yr: +2 bps to 3.95%
  • 3-yr: +2 bps to 3.76%
  • 5-yr: +3 bps to 3.69%
  • 10-yr: +3 bps to 3.85%
  • 30-yr: +3 bps to 4.14%

• News:
  • Japan's Prime Minister Kishida will visit South Korea at the end of next week.
  • The Chinese government issued 16,000 license plates for testing autonomous vehicles and designated some public roads for testing purposes.
  • South Korea's finance ministry expects that bond sales in 2025 will see a 20% increase over 2024.
  • French President Macron has reportedly ruled out naming a prime minister from one of the left-wing parties and will continue searching for a candidate. 
  • British Prime Minister Starmer acknowledged the existence of a GBP22 bln budget gap and said that the Autumn budget will be painful.
  • China's July Industrial Profit was up 3.6% YTD (last 3.5%).
  • Japan's August Corporate Services Price Index rose 2.8% yr/yr (expected 2.9%; last 3.1%). June BoJ Core CPI was up 1.8% yr/yr (expected 2.1%; last 2.1%).
  • Hong Kong's July trade deficit reached $21.8 bln (last deficit of $55.7 bln) as imports rose 9.9% m/m (last 9.0%) and exports increased 13.1% m/m (last 10.7%).
  • Germany's Q2 GDP contracted 0.1% qtr/qtr, as expected (last 0.2%) but was unchanged yr/yr (expected -0.1%; last -0.2%). September GfK Consumer Climate fell to -22.0 from -18.6.
  • U.K.'s August CBI Distributive Trades Survey rose to -27 from -43 (expected -11).
• Commodities:
  • WTI Crude: -0.5% to $77.03/bbl
  • Gold: -0.3% to $2546.60/ozt
  • Copper: +0.2% to $4.228/lb
• Currencies:
  • EUR/USD: UNCH at 1.1160
  • GBP/USD: +0.3% to 1.3220
  • USD/CNH: +0.1% to 7.1269
  • USD/JPY: UNCH at 144.52
• Data out Today:
  • 9:00 ET: June FHFA Housing Price Index (prior 0.0%) and June S&P Case-Shiller Home Price Index (Briefing.com consensus 6.0%; prior 6.8%)
  • 10:00 ET: August Consumer Confidence (Briefing.com consensus 100.0; prior 100.3)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results