Bond Market Update

Yields Dip in Front of Data

• U.S. Treasuries saw a narrow range in overnight trading, but one that remained predisposed to lower yields. We'll see if that remains the case, as there is a large slate of economic data today that includes the weekly initial jobless claims and continuing jobless claims data, the third estimate for Q1 GDP, May durable goods orders, and the advance estimate for international trade in goods at 8:30 a.m. ET. There is also more supply to take in with the $44 bln 7-yr note auction. Separately, there has been a bit of a headline stir with The Wall Street Journal reporting that the president is considering naming a replacement for when Fed Chair Powell's term ends in May 2026 by September or October, if not sooner. The U.S. Dollar Index is down 0.4% to 97.34, with the euro running to its best level since 2021.
• Yield Check:
  • 2-yr: -2 bps to 3.76%
  • 3-yr: -1 bp to 3.73%
  • 5-yr: -1 bps to 3.83%
  • 10-yr: -2 bps to 4.27%
  • 30-yr: -2 bps to 4.82%

• News:
  • Multiple Republican senators tell leadership that they are not ready to support the reconciliation bill and want changes to certain provisions, according to Politico
  • President Trump considers announcing his selection for 2026 Fed Chair this summer. Kevin Warsh, Scott Bessent, and Christopher Waller are among the contenders, according to The Wall Street Journal
  • Senate considering delays Medicaid cuts in large reconciliation bill, according to PunchBowl News
  • EU debating if it wants a quick trade deal with U.S. or if it wants to fight for better terms, according to Reuters
  • China still dragging out approvals for rare earth exports, according to The Wall Street Journal
  • South Korean President Lee warned that the Korean economy is in a desperate situation, adding that bold investment should be made in AI and chips
  • Japan's top trade negotiator repeated that he cannot accept a 25% tariff on auto exports to the U.S.
  • Germany's July GfK Consumer Climate -20.3 (expected -19.1; last -20.0)
• Commodities:
  • WTI crude: +1.7% to $65.43/bbl
  • Gold: +0.1% to $3348.50/ozt
  • Copper: +2.6% to $5.10/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1700
  • GBP/USD: +0.3% to 1.3703
  • USD/CNH: flat at 7.1677
  • USD/JPY: -0.5% to 144.41
• The Day Ahead:
  • 08:30 ET: Q1 GDP - Third Estimate (Briefing.com consensus -0.2%; prior -0.2%) and Q1 GDP Deflator - Third Estimate (Briefing.com consensus 3.7%; prior 3.7%)
  • 08:30 ET: May Durable Goods Orders (Briefing.com consensus 6.6%; prior -6.3%) and Durable Goods, Ex-Transportation (Briefing.com consensus 0.1%; prior 0.2%)
  • 08:30 ET: Initial Jobless Claims (Briefing.com consensus 247K; prior 245K) and COntinuing Jobless Claims (prior 1945K)
  • 08:30 ET: May Adv. Intl. Trade in Goods (prior -$87.6B), Retail Inventories (prior -0.1%), and Wholesale Inventories (prior 0.0%)
  • 09:00 ET: Cleveland Fed President Beth Hammack (non-FOMC voter)
  • 10:00 ET: May Pending Home Sales (Briefing.com consensus 0.4%; prior -6.3%)
  • 10:30 ET: EIA Natural Gas Inventories (prior +95 bcf)
  • 13:00 ET: $44 bln 7-yr note auction