Bond Market Update

Yields Stay on Lower Track

• U.S. Treasuries have found a bid in front of this morning's economic data, bolstered by a better-than-feared 30-yr Japanese government bond sale, festering growth concerns, and misgivings about the timely passage of the reconciliation bill, which the CBO estimated yesterday would add $2.4 trillion to the budget deficit over the next decade. Elon Musk has contributed to the misgivings, calling the bill yesterday a "disgusting abomination" and urging today to "kill the bill"; meanwhile, various press reports have highlighted growing objections in the Senate to the House's version of the reconciliation bill, including the SALT deduction cap. Separately, the ECB is holding a policy meeting today, and it is expected to cut its deposit rate by 25 basis points to 2.00%. That decision will be out at 8:15 a.m. ET. The U.S. Dollar Index is up 0.04% to 98.83.
• Yield Check:
  • 2-yr: -1 bp to 3.87%
  • 3-yr: -1 bp to 3.83%
  • 5-yr: -1 bp to 3.92%
  • 10-yr: -2 bps to 4.34%
  • 30-yr: -5 bps to 4.84%

• News:
  • Elon Musk continues to denounce the one, big beautiful bill, saying on X, "Kill the bill," according to Politico
  • Big differences between Senate and White House threaten the president's July 4 deadline for getting bill done, according to Punchbowl News
  • President Trump signs travel ban for 12 countries, according to Bloomberg
  • President Trump, citing national security concerns, announces restrictions on entry for foreign nationals studying at Harvard, according to White House
  • China's restrictions on exports of rare earth minerals threatens auto production, according to Reuters
  • Aluminum industry executives express concerns about demand destruction following tariff rate increase, according to Bloomberg
  • Senate confirms Fed Governor Bowman as Vice Chair for Supervision, according to Reuters
  • ECB expected to cut its deposit rate by 25 basis points today to 2%, according to Bloomberg
  • Japan's 30-yr bond auction not good, but better than feared, according to Bloomberg
  • China's May Caixin Services PMI 51.1 (expected 51.0; last 50.7)
• Commodities:
  • WTI crude: +0.1% to $62.90/bbl
  • Gold: +0.6% to $3420.60/ozt
  • Copper: +2.3% to $4.99/lb
• Currencies:
  • EUR/USD: flat at 1.1420
  • GBP/USD: flat at 1.3568
  • USD/CNH: +0.1% to 7.1780
  • USD/JPY: +0.4% to 143.30
• The Day Ahead:
  • 08:30 ET: Initial Jobless Claims (Briefing.com consensus 235K; prior 240K) and Continuing Jobless Claims (prior 1919K)
  • 08:30 ET: April Trade Balance (Briefing.com consensus -$117.2B; prior -$140.5B)
  • 08:30 ET: Q1 Productivity - Rev (Briefing.com consensus -0.8%; prior -0.8%) and Unit Labor Costs - Rev (Briefing.com consensus 5.7%; prior 5.7%)
  • 10:30 ET: EIA Natural Gas Inventories (prior +101 bcf)
  • 12:00 ET: Fed Governor Kugler (FOMC voter)
  • 13:30 ET: Fed Governor Harker (non-FOMC voter)