Bond Market Update

Three's Company

• U.S. Treasuries are locked in a mechanical trade in front of a large batch of economic data. Yields are down three basis points across the curve from the 2-yr note to the 30-yr bond. The gains follow the news that the House passed a procedural vote on the "One Big, Beautiful Bill" that cleared the way for a full House vote today and likely passage of the bill so that it is on the president's desk for signing by July 4. Other drivers include rate cut expectations amid speculation that the June jobs report will be soft, and as President Trump again chastises Fed Chair Powell, saying he "should resign immediately," and some safety positioning in front of the long holiday weekend for the U.S. There will be an early close today at 2:00 p.m. ET (stocks close at 1:00 p.m. ET), and markets will be closed Friday for Independence Day. 
• Yield Check:
  • 2-yr: -3 bps to 3.76%
  • 3-yr: -3 bps to 3.74%
  • 5-yr: -3 bps to 3.84%
  • 10-yr: -3 bps to 4.26%
  • 30-yr: -3 bps to 4.79%

• News:
  • House votes 219-213 on procedural motion that advances “One Big Beautiful Bill” to a final House vote, which is expected shortly. House Speaker Mike Johnson says, “we have the votes.”
  • The White House is promising Republican fiscal hawks future spending cuts after reconciliation bill passes, according to Politico
  • President Trump, in Truth Social post, says Fed Chairman Jerome Powell should resign immediately
  • The U.S. pulled back restrictions on sales of chip design software to China, according to Bloomberg
  • The Pentagon says the Iranian nuclear program was delayed by two years by strikes, according to The Wall Street Journal
  • British Prime Minister Starmer said that Chancellor Reeves will be in her position "for years to come" after Parliament reversed some of her welfare reform plans
  • South Korea's President Lee said that trade negotiations with the U.S. are looking very difficult, and it is unclear if they can be finished ahead of the July 9 deadline.
  • Secretary of State Rubio cancelled his planned trip to Japan and South Korea, but he might still visit Malaysia.
  • China's June Caixin Services PMI 50.6 (expected 51.0; last 51.1)
  • Eurozone's June Services PMI 50.5 (expected 50.0; last 49.7)
• Commodities:
  • WTI crude: -0.3% to $67.22/bbl
  • Gold: flat at $3359.80/ozt
  • Copper: -0.5% to $5.17/lb
• Currencies:
  • EUR/USD: flat at 1.1793
  • GBP/USD: +0.1% to 1.3656
  • USD/CNH: flat at 7.1587
  • USD/JPY: +0.1% to 143.84
• The Day Ahead:
  • 08:30 ET: June nonfarm payrolls (Briefing.com consensus 120K; prior 139K); nonfarm private payrolls (Briefing.com consensus 123K; prior 140K); unemployment rate (Briefing.com consensus 4.2%; prior 4.2%); avg. hourly earnings (Briefing.com consensus 0.3%; prior 0.4%), and average workweek (Briefing.com consensus 34.3; prior 34.3)
  • 08:30 ET: Initial jobless claims (Briefing.com consensus 240K; prior 236K) and continuing jobless claims (prior 1974K)
  • 08:30 ET: May Trade Balance (Briefing.com consensus -$70.5B; prior -$61.6B)
  • 09:45 ET: June S&P Global US Services PMI - Final (prior 53.7%)
  • 10:00 ET: June ISM Services PMI (Briefing.com consensus 50.3%; prior 49.9%)
  • 10:00 ET; May Factory Orders (Briefing.com consensus 7.9%; prior -3.7%)
  • 10:30 ET: EIA Natural Gas Inventories (prior +96 bcf)