Bond Market Update

Some Selling Interest

• U.S. Treasuries have succumbed to some selling interest, which has reduced some nice week-to-date gains across the curve. The stock market is poised to begin today's session at a record high, comforted by reports that the U.S. and China confirmed the details of the trade framework agreement they reached in London, which should improve China's approval of rare earth exports and relax the U.S.'s restrictions on technology exports to China, and Commerce Secretary Lutnick's contention that the U.S. is close to trade deals with 10 other partners. The "One Big, Beautiful Bill" continues to work its way through the Senate, but Politico reports internal disputes and procedural issues could delay a vote on the bill this weekend. Notably, Treasury Secretary Bessent has asked the Senate and House to remove Section 899 ("revenge tax") from the bill after reaching an understanding with G7 partners. Some key economic data is on tap, with the release of the Personal Income and Spending Report at 8:30 a.m. ET. That report contains the PCE Price Index and Core-PCE Price Index, which are key inflation gauges for the Fed. 
• Yield Check:
  • 2-yr: +3 bps to 3.75%
  • 3-yr: +3 bps to 3.72%
  • 5-yr: +3 bps to 3.83%
  • 10-yr: +2 bps to 4.27%
  • 30-yr: unch at 4.82%

• News:
  • President Trump on Wednesday says US signed a trade deal with China; China's Ministry of Commerce confirmed the trade deal framework
  • Treasury Secretary Scott Bessent asks "the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill"
  • Senate Republicans are preparing to stay in town and vote on the reconciliation bill this weekend, but internal disputes and procedural issues might impact that timetable, according to Politico
  • Commerce Secretary Howard Lutnick in interview says White House has "imminent" plans to reach trade deals with 10 trading partners, according to Bloomberg
  • House plans to vote on stablecoin legislation in two weeks, according to Bloomberg
  • Federal Reserve to release results of bank stress tests after the close
  • The Bank of England is facing growing pressure to reduce its bond sales due to a concern that the sales are leading to increased borrowing costs
  • ECB policymaker Knot said that the central bank might have to keep rates at their current levels for some time, but he would not rule out another rate cut
  • China's May Industrial Profit -1.1% YTD (last 1.4%)
• Commodities:
  • WTI crude: +0.5% to $65.57/bbl
  • Gold: -1.7% to $3292.80/ozt
  • Copper: -1.1% to $5.07/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1718
  • GBP/USD: +0.1% to 1.3734
  • USD/CNH: +0.1% to 7.1716
  • USD/JPY: +0.1% to 144.58
• The Day Ahead:
  • 08:30 ET: May Personal Income (Briefing.com consensus 0.4%; prior 0.8%), Personal Spending (Briefing.com consensus 0.2%; prior 0.2%), PCE Price Index (Briefing.com consensus 0.1%; prior 0.1%), and core-PCE Price Index (Briefing.com consensus 0.1%; prior 0.1%)
  • 10:00 ET: June Univ. of Michigan Consumer Sentiment - Final (Briefing.com consensus 60.5; prior 52.2)