Bond Market Update

Quiet Start Ahead

• U.S. Treasuries are on track for a flat start. Treasury futures held modest gains through the bulk of the evening, giving back their slight gains once the focus started shifting to action in Europe, where companies including Volkswagen and Puma reduced their guidance for the year due to the expected impact of U.S. tariffs. This has weighed on European equities while regional debt is also facing pressure amid growing expectations that the European Central Bank will not announce another rate cut until Q4. In Washington, President Trump had a public disagreement with Fed Chairman Powell about renovation costs of the Eccles building, but more notably, the president also said that he doesn't think it is necessary to fire the Fed chairman. Crude oil is building on yesterday's gain while the U.S. Dollar Index is up 0.5% at 97.82.
• Yield Check:
  • 2-yr: UNCH at 3.92%
  • 3-yr: UNCH at 3.87%
  • 5-yr: UNCH at 3.97%
  • 10-yr: UNCH at 4.41%
  • 30-yr: UNCH at 4.95%

• News:
  • Expectations for an October rate hike from the Bank of Japan continued increasing and there was speculation that the BoJ could announce a surprise rate hike next week to get ahead of political uncertainty associated with the expected resignation of Prime Minister Ishiba.
  • The Reserve Bank of New Zealand expects a 0.3% contraction in New Zealand's Q2 GDP.
  • Thailand's acting prime minister warned that hostilities with Cambodia are leading toward war.
  • The European Central Bank's latest survey of professional forecasters trimmed its harmonized inflation forecast for 2025 and 2026 by 20 basis points. The growth forecast for 2025 was increased to 1.1% from 0.9% while the outlook for 2026 was cut to 1.1% from 1.2%.
  • Japan's July Tokyo CPI was up 2.9% yr/yr (last 3.1%) and Tokyo Core CPI was also up 2.9% yr/yr (expected 3.0%; last 3.1%). June Corporate Services Price Index was up 3.2% yr/yr, as expected (last 3.4%). May Leading Index rose to 104.8 from 104.2 (expected 105.3) and Coincident Indicator was unchanged m/m (expected -0.1%; last 0.2%).
  • Singapore's Q2 URA Property Index was up 1.0% qtr/qtr (expected 0.5%; last 0.8%). June Industrial Production was unchanged m/m (expected -1.5%; last 1.0%), rising 8.0% yr/yr (expected 7.1%; last 3.6%).
  • Eurozone's June M3 Money Supply was up 3.3% yr/yr (expected 3.7%; last 3.9%) and June Private Sector Loans rose 2.2% yr/yr (expected 1.9%; last 2.0%).
  • Germany's July ifo Business Climate Index ticked up to 88.6 from 88.4 (expected 89.0). July Current Assessment rose to 86.5 from 86.2 (expected 86.7) and July Business Expectations ticked up to 90.7 from 90.6 (expected 91.1).
  • U.K.'s June Retail Sales rose 0.9% m/m (expected 1.2%; last -2.8%), increasing 1.7% yr/yr (expected 1.8%; last -1.1%). June Core Retail Sales were up 0.6% m/m (expected 1.2%; last -2.9%), rising 1.8% yr/yr (expected 2.0%; last -1.2%).
  • France's July Consumer Confidence rose to 89 from 88 (expected 88).
  • Italy's July Business Confidence rose to 87.8 from 87.3 (expected 87.7) and July Consumer Confidence rose to 97.2 from 96.1 (expected 96.0).
• Commodities:
  • WTI Crude: +0.4% to $66.31/bbl
  • Gold: -0.9% to $3343.70/ozt
  • Copper: UNCH at $5.799/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1721
  • GBP/USD: -0.4% to 1.3450
  • USD/CNH: +0.2% to 7.1679
  • USD/JPY: +0.4% to 147.68
• Data out Today:
  • 8:30 ET: June Durable Orders (Briefing.com consensus -11.0%; prior 16.4%) and Durable Orders ex-transport (Briefing.com consensus -0.2%; prior 0.5%)