Bond Market Update

Trimming Monday Losses

• U.S. Treasuries are on track for a modestly higher start with shorter tenors looking to reclaim their losses from Monday while the long end is set to recover a smaller chunk of yesterday's loss. Treasury futures held slim gains through the bulk of the night, facing some brief weakness at the start of the European session. However, the market overcame that weakness with ease, rising to highs during the past hour. Officials from China and the U.S. met in Stockholm for the second day in a row, but the meeting did not produce any headlines. The market will receive a handful of economic reports this morning, including July Consumer Confidence (Briefing.com consensus 95.5; prior 93.0) at 10:00 ET, and the U.S. Treasury will cap this week's note auction slate with a sale of $44 bln in 7-yr notes. Crude oil is little changed while the U.S. Dollar Index is up 0.2% at 98.82.
• Yield Check:
  • 2-yr: -2 bps to 3.91%
  • 3-yr: -2 bps to 3.86%
  • 5-yr: -2 bps to 3.96%
  • 10-yr: -3 bps to 4.39%
  • 30-yr: -3 bps to 4.93%

• News:
  • Australian press reported that President Trump threatened to double the baseline tariff that is being charged for Australian imports into the U.S.
  • A South Korean trade delegation is expected to visit Washington in the coming days.
  • Deutsche Bank no longer expects more cuts from the European Central Bank and it sees a rate hike in late 2026 as the next likely move.
  • The EU noted that it can't guarantee that $600 bln will be invested in the U.S. since the money would come entirely from the private sector.
  • Barclays reported mixed results for Q2 while Phillips raised its guidance. Stellantis reported weak results but reinstated its guidance for the year.
  • U.K.'s June BoE Consumer Credit reached GBP1.417 bln (expected GBP1.200 bln; last GBP920 mln), June Mortgage Approvals hit 64,170 (expected 63,000; last 63,290), and June Net Lending to Individuals reached GBP6.757 bln (expected GBP3.700 bln; last GBP2.900 bln).
  • Spain's flash Q2 GDP expanded 0.7% qtr/qtr (expected 0.6%; last 0.6%), growing 2.8% yr/yr (last 2.8%). June Retail Sales were up 6.2% yr/yr (last 5.0%).
• Commodities:
  • WTI Crude: +0.1% to $66.80/bbl
  • Gold: +0.2% to $3315.60/ozt
  • Copper: -0.1% to $5.61/lb
• Currencies:
  • EUR/USD: -0.4% to 1.1538
  • GBP/USD: -0.1% to 1.3339
  • USD/CNH: UNCH at 7.1826
  • USD/JPY: +0.1% to 148.69
• Data out Today:
  • 8:30 ET: June advance International Trade in Goods (prior -$96.6 bln), advance Retail Inventories (prior 0.3%), and advance Wholesale Inventories (prior -0.3%)
  • 9:00 ET: May FHFA Housing Price Index (Briefing.com consensus -0.2%; prior -0.4%) and May S&P Case-Shiller Home Price Index (Briefing.com consensus 3.0%; prior 3.4%)
  • 10:00 ET: July Consumer Confidence (Briefing.com consensus 95.5; prior 93.0) and July job openings (prior 7.769 mln)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results