Bond Market Update

Short End Leads

• U.S. Treasuries are on track for a higher start with the short end expected to show an early continuation of yesterday's relative strength. Treasury futures navigated a sideways range through a quiet night, returning to their early evening highs during the past hour. The advance took place alongside gains in other sovereign debt and a mostly range-bound showing from global equity markets as anticipation continues building ahead of tonight's release of quarterly results from chip leader NVIDIA (NVDA). The overnight data flow was limited with things set to remain quiet during the U.S. session. However, the U.S. Treasury will continue this week's note auction slate with a $70 bln 5-yr note sale at 13:00 ET. Crude oil is adding to yesterday's loss while the U.S. Dollar Index is up 0.4% at 100.96.
• Yield Check:
  • 2-yr: -5 bps to 3.85%
  • 3-yr: -1 bp to 3.71%
  • 5-yr: -2 bps to 3.64%
  • 10-yr: -2 bps to 3.81%
  • 30-yr: -3 bps to 4.10%

• News:
  • Bank of Japan Deputy Governor Himino said that the central bank will adjust the degree of easing if there is greater certainty.
  • Chinese developer Country Garden is reportedly considering an additional delay to its yuan-denominated bond payments.
  • Hungary's central bank left its policy rate unchanged at 6.75%, as expected.
  • British Prime Minister Starmer is meeting with German Chancellor Scholz to discuss a new cooperation treaty.
  • Japan's June Leading Index fell to 109.0 from 111.2 (expected 108.6) and Coincident Indicator was down 3.9% m/m (expected -3.4%; last 1.9%).
  • Australia's July CPI decelerated to 3.5% yr/yr from 3.8% (expected 3.4%) and Q2 Construction Work Done was up 0.1% qtr/qtr (expected 0.8%; last -2.0%).
  • Eurozone's July M3 Money Supply rose 2.3% yr/yr (expected 2.7%; last 2.2%), July Loans to nonfinancials were up 0.6% yr/yr (last 0.7%), and July Private Sector Loans rose 0.5% yr/yr, as expected (last 0.3%). 
  • France's August Consumer Confidence rose to 92 from 91, as expected.
  • Italy's June Industrial Sales were up 0.1% m/m (last -1.0%) but down 3.7% yr/yr (last -4.8%).
  • Swiss August ZEW Expectations fell to -3.4 from 9.4.
• Commodities:
  • WTI Crude: -1.8% to $74.18/bbl
  • Gold: -0.6% to $2538.00/ozt
  • Copper: -2.2% to $4.147/lb
• Currencies:
  • EUR/USD: -0.6% to 1.1120
  • GBP/USD: -0.4% to 1.3210
  • USD/CNH: +0.2% to 7.1310
  • USD/JPY: +0.3% to 144.33
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 0.5%; prior -10.1%)
  • 10:30 ET: Weekly crude oil inventories (prior -4.65 mln)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results