Bond Market Update

Pullback Deepens

• U.S. Treasuries are on track for a lower start, looking to continue yesterday's intraday reversal from fresh 2024 highs in most tenors. Treasury futures faced pressure in early evening action, adding to their losses as the night went on. The market reached lows near the end of the Asian session, followed by a shallow pullback. Overnight action saw a strong bounce in Japan's Nikkei (+10.2%) and a smaller pullback in the yen. Economic data released today included below-consensus Retail Sales (-0.3%; expected 0.0%) in the eurozone while the U.S. session will see the release of the June Trade Balance (Briefing.com consensus -$72.8 bln; prior -$75.1 bln), followed by a $58 bln 3-yr note auction this afternoon. Crude oil is little changed while the U.S. Dollar Index is up 0.5% at 103.19, extending yesterday's bounce off its lowest level since mid-January.
• Yield Check:
  • 2-yr: +10 bps to 3.98%
  • 3-yr: +10 bps to 3.81%
  • 5-yr: +8 bps to 3.71%
  • 10-yr: +6 bps to 3.85%
  • 30-yr: +5 bps to 4.12%

• News:
  • The Reserve Bank of Australia left its cash rate at 4.35%, as expected. The central bank expects to keep the cash rate steady into the middle of next year.
  • The Bank of England released its resolvability assessment of major banks, noting that if one of the eight major British banks were to fail, the failure would be absorbed by the system.
  • Drugmaker Bayer reported mixed result for the quarter and affirmed its guidance for the year.
  • Japan's June Household Spending was up 0.1% m/m (expected 0.2%; last -0.3%) but down 1.4% yr/yr (expected -0.9%; last -1.8%). June overall wage income was up 4.5% yr/yr (expected 2.3%; last 2.0%).
  • Australia's July ANZ Job Advertisements fell 3.0% m/m (last -2.7%). June Building Approvals fell 6.5% m/m, as expected (last 5.5%), and June Private House Approvals were down 0.5% m/m, as expected (last 1.9%).
  • Eurozone's June Retail Sales were down 0.3% m/m (expected 0.0%; last 0.1%), falling 0.3% yr/yr (expected 0.1%; last 0.5%).
  • Germany's June Factory Orders rose 3.9% m/m (expected 0.4%; last -1.7%).
  • France's Q2 nonfarm payrolls were unchanged qtr/qtr (expected 0.2%; last 0.3%).
  • Swiss July Unemployment Rate rose to 2.5% from 2.4%, as expected. June Retail Sales were down 2.2% yr/yr (expected 0.5%; last -0.2%).
• Commodities:
  • WTI Crude: UNCH at $72.92/bbl
  • Gold: +0.4% to $2455.30/ozt
  • Copper: -0.2% to $3.99/lb
• Currencies:
  • EUR/USD: -0.4% to 1.0910
  • GBP/USD: -0.6% to 1.2692
  • USD/CNH: +0.2% to 7.1511
  • USD/JPY: +0.8% to 145.19
• Data out Today:
  • 8:30 ET: June Trade Balance (Briefing.com consensus -$72.8 bln; prior -$75.1 bln)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results