Bond Market Update

Trimming Recent Losses

• U.S. Treasuries are on track for a modestly higher start after three days of selling with longer tenors set for an early show of relative strength. Treasury futures climbed steadily throughout the night, which was light on news and market-moving data. Japan's Nikkei (+0.6%) finished a down week on a positive note while the yen spent the night in a narrow range against the dollar. China's CPI was hotter than expected in July (0.5%; expected 0.3%) while PPI (-0.8%; expected -0.9%) deflated for the 22nd consecutive month. The U.S. session will not feature any economic data, capping a subdued week on that front. Crude oil holds a modest gain while the U.S. Dollar Index is flat at 103.25.
• Yield Check:
  • 2-yr: -1 bp to 4.03%
  • 3-yr: -2 bps to 3.86%
  • 5-yr: -4 bps to 3.79%
  • 10-yr: -6 bps to 3.94%
  • 30-yr: -6 bps to 4.23%

• News:
  • China sold 50-yr bonds at a record low yield.
  • Italian banks may reportedly face some pressure to increase interest rates on deposits.
  • China's July CPI was up 0.5% m/m (expected 0.3%; last -0.2%), rising 0.5% yr/yr (expected 0.3%; last 0.2%). July PPI was down 0.8% m/m (expected -0.9%; last -0.8%).
  • Japan's July M2 Money Stock was up 1.4% yr/yr (expected 1.6%; last 1.5%).
  • Germany's July CPI was up 0.3% m/m, as expected (last 0.1%), rising 2.3% yr/yr, as expected (last 2.2%).
  • France's Q2 Unemployment Rate fell to 7.3% from 7.5% (expected 7.5%).
  • Italy's July CPI was up 0.4% m/m (expected 0.5%; last 0.1%), rising 1.3% yr/yr, as expected (last 0.8%). June trade surplus reached EUR5.065 bln (expected surplus of EUR5.550 bln; last surplus of EUR6.377 bln).
  • Swiss Q3 SECO Consumer Climate rose to -19 from -24 (expected -36).
• Commodities:
  • WTI Crude: +0.7% to $76.66/bbl
  • Gold: +0.1% to $2465.40/ozt
  • Copper: +1.9% to $4.034/lb
• Currencies:
  • EUR/USD: UNCH at 1.0915 
  • GBP/USD: UNCH at 1.2739 
  • USD/CNH: -0.1% to 7.1710
  • USD/JPY: -0.1% to 147.02
• No Data on Today's Schedule