Bond Market Update

Hesitation

• Not much conviction in today's trade, as market participants wait on Tuesday's release of the June Consumer Price Index, which will help inform views on inflation and monetary policy.
  • Currently, there is a 4.7% probability of a 25 basis point rate cut at the July FOMC meeting and a 64% probability of at least a 25 basis point rate cut at the September FOMC meeting, according to the CME FedWatch Tool
• Overall, not much reaction to the latest round of tariff letters, which have gone to Mexico and the EU. They will face a 30% tariff rate starting August 1 if they cannot work out better trade terms for the U.S. before then.
• Tuesday will also feature a bevy of Fed speakers:
  • Fed Governor Bowman (FOMC voter) at 9:15 a.m.ET
  • Fed Governor Barr (FOMC voter) at 12:45 p.m. ET
  • Boston Fed President Collins (FOMC voter) at 2:45 p.m. ET
  • Dallas Fed President Logan (non-FOMC voter) at 6:45 p.m. ET
• Yield check:
  • 2-yr: -1 bp to 3.90%
  • 3-yr: unch at 3.88%
  • 5-yr: unch at 3.99%
  • 10-yr: +2 bps to 4.44%
  • 30-yr: +2 bps to 4.98%