Bond Market Update

Sitting Tight

• U.S. Treasuries are little changed, notwithstanding a confirmation that the 50% tariff rate for copper imports to the U.S. will start August 1 and Brazil getting a letter that says it will face a 50% tariff rate starting August 1. Brazil said it plans to reciprocate. In any case, the market continues to sit tight, seemingly repressing any concerns about inflation until it sees it in the data. Germany, for its part, reported some pleasing data for June CPI, which dipped to 2.0% yr/yr from 2.1% previously. The weekly initial and continuing jobless claims report is the key piece of data on the U.S. calendar today. That will be released at 8:30 a.m. ET and will be followed by the $22 billion 30-yr bond auction results at 1:00 p.m. ET. The U.S. Dollar Index is flat at 97.54.
• Yield Check:
  • 2-yr: -1 bp to to 3.85%
  • 3-yr: -1 bp to 3.82%
  • 5-yr: -1 bp to 3.91%
  • 10-yr: unch at 4.34%
  • 30-yr: -1 bp to 4.87%

• News:
  • President Trump confirms that Brazil will face 50% tariff in response to Bolsonaro trial and trade imbalance
    • Brazil President Luiz Inácio Lula da Silva says "Therefore, any unilateral tariff increases will be addressed in accordance with Brazil's Economic Reciprocity Law"
  • President Trump confirms 50% copper tariff will begin August 1st
  • Indian officials will soon visit U.S. for trade talks (INDA). Bloomberg
  • Vietnam is planning additional penalties for transshipping following an agreement with President Trump. Reuters
  • The Bank of Korea left its policy rate at 2.50%, as expected
  • OPEC sees global oil demand at almost 123 mb/d in 2050
  • Japan reduced its 20-yr JGB auction size to improve demand
  • $22 bln 30-yr bond auction results at 1:00 p.m. ET
  • Germany's June CPI 0.0% m/m, as expected (last 0.1%); 2.0% yr/yr, as expected (last 2.1%)
• Commodities:
  • WTI crude: -0.5% to $68.02/bbl
  • Gold: +0.5% to $3336.70/ozt
  • Copper: +2.8% to $5.64/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1716
  • GBP/USD: flat at 1.3584
  • USD/CNH: flat at 7.1789
  • USD/JPY: -0.1% to 146.23
• The Day Ahead:
  • 08:30 ET: Initial Jobless Claims (Briefing.com consensus: 245K; prior 233K) and Continuing Jobless Claims (prior 233K)
  • 10:30 ET: EIA Natural Gas Inventories (prior +55 bcf)
  • 13:00 ET: $22 bln 30-yr bond reopening