Bond Market Update

In Demand

• U.S. Treasuries were bid in the overnight session, bolstered by a successful 10-yr Japanese government bond sale and a Caixin Manufacturing PMI out of China that was the lowest (48.3) since 2022. An inflation-friendly CPI reading for May out of the eurozone (1.9% yr/yr) and the OECD lowering its 2025 global growth forecast to 2.9% (from 3.1%) and U.S. growth forecast to 1.6% (from 2.2%) helped fortify the positive bias that has yields lower across the curve, with the back end slightly outperforming the front end. The U.S. Dollar Index is up 0.4% to 99.06.
• Yield Check:
  • 2-yr: -2 bps to 3.92%
  • 3-yr: -4 bps to 3.87%
  • 5-yr: -5 bps to 3.97%
  • 10-yr: -5 bps to 4.41%
  • 30-yr: -7 bps to 4.93%

• News:
  • China's lead trade negotiator to take firmer stance than predecessor in President Trump's first term, according to The Wall Street Journal
  • Commerce Secretary Lutnick says U.S.-India trade deal is close, according to Reuters
  • Global bond yields ease as Japan sees successful 10-yr government bond sale, according to Bloomberg
  • Senate GOP to look more closely at potential impact of Section 899 provision of House reconciliation bill, according to Bloomberg
  • Bank of Japan Governor Ueda said central bank would raise rates if growth re-accelerates, signals sticking with taper of bond purchases, according to Reuters
  • Iran likely to reject U.S. nuclear deal proposal, according to Reuters
  • OECD lowers global GDP growth forecast to 2.9% (from 3.1%) and U.S. growth forecast to 1.6% (from 2.2%)
  • Americans scaling back summer travel plans, according to Reuters
  • Eurozone's flash May CPI 0.0% m/m (last 0.6%); 1.9% yr/yr (expected 2.0%; last 2.2%). Flash May Core CPI 0.0% m/m (last 1.0%); 2.3% yr/yr (expected 2.4%; last 2.7%)
  • China's May Caixin Manufacturing PMI 48.3 (expected 50.7; last 50.4)
• Commodities:
  • WTI crude: +0.6% to $62.88/bbl
  • Gold: -0.4% to $3382.90/ozt
  • Copper: -1.5% to $4.78/lb
• Currencies:
  • EUR/USD: -0.5% to 1.1390
  • GBP/USD: -0.3% to 1.3500
  • USD/CNH: -0.2% to 7.1932
  • USD/JPY: +0.3% to 143.10
• The Week Ahead:
  • 10:00 ET: April Factory Orders (Briefing.com consensus -3.1%; prior 4.3%)
  • 10:00 ET: April JOLTS - Job Openings (prior 7.192M)