Bond Market Update

Seeking Safety

• U.S. Treasuries have found a bid, presumably driven by some safe-haven interest after President Trump left the G7 Summit early, noting along the way that everyone should evacuate Tehran immediately. ABC News has also reported that the president has requested that his national security team be ready in the White House Situation Room today and that he wants a "real end" to Iran's nuclear program. This geopolitical news is overshadowing other developments, such as the BOJ decision to hold rates steady at 0.50% due to what it sees as growth risks. Some key, hard economic data in the form of the May Retail Sales Report is due at 8:30 a.m. ET.
• Yield check:
  • 2-yr: -3 bps to 3.94%
  • 3-yr: -4 bps to 3.89%
  • 5-yr: -4 bps to 4.00%
  • 10-yr: -5 bps to 4.41%
  • 30-yr: -4 bps to 4.92%
• News:
  • President Trump leaves G-7 early and returns to Washington, DC to focus on Middle East; says "everyone should immediately evacuate Tehran" (Iran's capital); denies reports that he has reached out to Iran for peace talks
  • President Trump requested that his national security team be ready in the White House Situation Room today and told reporters he wants a "real end" to Iran's nuclear program, according to ABC News
  • President Trump confirms implementation of UK/US trade deal, according to the Independent
  • European Commission President von der Leyen said at the G7 summit that EU countries should have a unified approach to challenging China's trade practices
  • Senate Republicans acknowledge the $10K cap for state and local tax deduction is a placeholder for future negotiations, as New York House Republicans say the cap is too low, according to The Hill
  • Senate tax committee proposed a full phase-out of solar and wind energy tax credits by 2028, according to Reuters
  • Senate Republicans to omit Medicare Advantage cuts but proposes more aggressive Medicaid cuts, according to Bloomberg
  • Senator Ron Johnson (R-WI) says he will not support the reconciliation bill because it doesn't cut spending enough, according to The Hill
  • The Bank of Japan left its policy rate at 0.50%, as expected, and voted to slow JGB purchases by JPY200 bln per quarter, starting April 2026
  • Canadian Prime Minister Mark Carney expects a trade deal with the U.S. in 30 days, according to Reuters
  • President Trump tells reporters that the EU is not offering a fair trade deal, according to Reuters
  • Central banks are planning to purchase more gold this year and expect dollar holdings will fall, according to FT
  • Eurozone's June ZEW Economic Sentiment 35.3 (expected 23.5; last 11.6)
• Commodities:
  • WTI crude: +1.8% to $73.07/bbl
  • Gold: -0.1% to $3413.40/toz
  • Copper: -0.3% to $4.82/lb
• Currencies:
  • EUR/USD: flat at 1.1563
  • GBP/USD: -0.2% to 1.3563
  • USD/CNH: flat at 7.1843
  • USD/JPY: -0.1% to 144.58
• The Day Ahead:
  • 08:30 ET: May Retail Sales (Briefing.com consensus -0.6%; prior 0.1%) and Retail Sales, Ex-Auto (Briefing.com consensus 0.1%; prior 0.1%)
  • 08:30 ET: May Import Prices (prior 0.1%), Import Prices, Ex-Fuel (prior 0.4%), Export Prices (prior 0.1%), and Export Prices, ex ag (prior 0.1%)
  • 09:15 ET: May Industrial Production (Briefing.com consensus 0.1%; prior 0.0%) and Capacity Utilization (Briefing.com consensus 77.7%; prior 77.7%)
  • 10:00 ET: April Business Inventories (Briefing.com consensus 0.0%; prior 0.1%)
  • 10:00 ET: June NAHB Housing Market Index (Briefing.com consensus 36; prior 34)