Bond Market Update

On Defense

• U.S. Treasuries have taken a defensive turn, with market participants waiting for some closure on the "One Big, Beautiful Bill," which is back in the House's hands, and the 8:15 a.m. ET release of the ADP Employment Change Report for May. The latter will offer more insight on the state of the labor market and also give the market something more to think about in terms of handicapping the timing of the next rate cut. Yields are up across the curve, while stocks are indicated to start today's session on a mixed note.
• Yield Check:
  • 2-yr: +3 bps to 3.80%
  • 3-yr: +3 bps to 3.77%
  • 5-yr: +3 bps to 3.87%
  • 10-yr: +3 bps to 4.28%
  • 30-yr: +4 bps to 4.82%

• News:
  • House Speaker Mike Johnson is trying to address various disagreements among Republicans ahead of House vote on the reconciliation bill, according to Politico
  • House Rules Committee votes 7-6 to advance large reconciliation bill to a full House vote; House Speaker Mike Johnson says "we are on the one yard line" and expects House vote today or tomorrow depending on when all members can get back to D.C. (weather issues were impacting flights)
  • President Trump threatened additional tariffs on Japan up to 35%, according to Bloomberg
  • ECB policymaker Centeno said that the central bank is in no hurry to cut rates, while policymaker Rehn said that the central bank should be on watch for inflation potentially staying below target in persistent fashion
  • The EU is resisting British Prime Minister Starmer's attempt to rejoin the EU's trading union
  • There is a growing likelihood of a rate cut from the Reserve Bank of Australia on July 8
  • President Trump says "Israel has agreed to the necessary conditions to finalize the 60 Day ceasefire [with Hamas], during which time we will work with all parties to end the war"
  • MBA Mortgage Applications Index +2.7% wk/wk, with refinance applications +7.0% and purchase applications +0.1%
  • Eurozone's May Unemployment Rate 6.3% (expected 6.2%; last 6.2%)
• Commodities:
  • WTI crude: +1.4% to $66.34/bbl
  • Gold: +0.1% to $3354.90/ozt
  • Copper: +0.7% to $5.14/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1770
  • GBP/USD: -0.3% to 1.3706
  • USD/CNH: +0.1% to 7.1678
  • USD/JPY: +0.4% to 143.96
• The Day Ahead:
  • 08:15 ET: June ADP Employment Change (Briefing.com consensus 97K; prior 37K)
  • 10:30 ET: EIA Crude Oil Inventories (prior -5.84M)