Bond Market Update

Waiting on Data

• U.S. Treasuries are weaker this morning in front of a large slate of economic data that features the June Retail Sales and weekly Initial Jobless Claims reports at 8:30 a.m. ET. The front end of the curve is underperforming the back end, with some unease over Fed Chair Powell's status and comments from New York Fed President Williams (FOMC voter) acting as weighing factors. Mr. Williams said that tariffs could push up inflation and that the Fed's policy is entirely appropriate. The dollar is drawing support from the thinking that a rate cut in September is moving closer to a coin toss. The CME FedWatch Tool shows only a 55.7% probability of a cut at the September FOMC meeting versus 70.3% a week ago.
• Yield Check:
  • 2-yr: +3 bps to 3.92%
  • 3-yr: +4 bps to 3.90%
  • 5-yr: +3 bps to 4.02%
  • 10-yr: +2 bps to 4.48%
  • 30-yr: +1 bp to 5.03%

• News:
  • President Trump considering 10-15% tariff rates for 150 nations. Bloomberg
  • New York Fed President Williams (FOMC voter) says tariffs could drive up inflation and that current policy is entirely appropriate
  • The Senate passes a bill to eliminate $9 bln in spending on foreign aid and public broadcasting. The House will vote on the bill later today. Washington Post
  • EU preparing retaliatory tariffs on US tariffs and export controls. FT
  • House votes to advance stablecoin legislation to a full House vote which is expected today. Politico
  • National security concerns impacting White House chip deal with U.A.E. WSJ
  • The EU is reportedly preparing a list of U.S. services that could be hit with tariffs on top of planned tariffs on imports of U.S. goods
  • Eurozone's June CPI 0.3% m/m, as expected (last 0.0%); 2.0% yr/yr, as expected (last 1.9%). June Core CPI 0.4% m/m, as expected (last 0.0%); 2.3% yr/yr, as expected (last 2.3%)
  • Japan's June imports 0.2% yr/yr (expected -1.6%; last -7.7%) and exports -0.5% yr/yr (expected 0.5%; last -1.7%)
• Commodities:
  • WTI crude: +0.4% to $66.65/bbl
  • Gold: -0.8% to $3330.60/ozt
  • Copper: -0.4% to $5.50/lb
• Currencies:
  • EUR/USD: -0.6% to 1.1577
  • GBP/USD: -0.3% to 1.3392
  • USD/CNH: +0.1% to 7.1860
  • USD/JPY: +0.6% to 148.70
• The Day Ahead:
  • 08:30 ET: June Retail Sales (Briefing.com consensus: 0.2%; prior -0.9%) and Retail Sales, Ex-Auto (Briefing.com consensus: 0.3%; prior -0.3%)
  • 08:30 ET: Initial Jobless Claims (Briefing.com consensus: 230K; prior 227K) and Continuing Jobless Claims (prior 1965K)
  • 08:30 ET: June Import Prices (prior 0.0%), Import Prices, Ex-Fuel (prior 0.3%), Export Prices (prior -0.9%), and Export Prices, Ex-Ag (prior -1.0%)
  • 08:30 ET: July Philadelphia Fed Index (Briefing.com consensus: -0.2; prior -4.0)
  • 10:00 ET: July NAHB Housing Market Index (Briefing.com consensus: 32; prior 32)
  • 10:00 ET: May Business Inventories (Briefing.com consensus -0.1%; prior 0.0%)
  • 10:00 ET: Fed Governor Kugler (FOMC voter)
  • 10:30 ET: EIA Natural Gas Inventories (prior +53 bcf)
  • 12:45 ET: San Francisco Fed President Daly (non FOMC voter)
  • 13:30 ET: Fed Governor Cook (FOMC voter)
  • 16:00 ET: May Net LT TIC Flows (prior -$7.8B)
  • 18:30 ET: Fed Governor Waller (FOMC voter)