Bond Market Update

Sellers Absent

• U.S. Treasuries had a strong session that translated into lower yields across the curve. There was steady buying interest and a dearth of selling interest in the cash session, which saw yields settle at their lows for the day. Buyer sentiment was aided by deflation readings out of China for CPI and PPI, rate-cut optimism stemming from chatter about possible replacements for Fed Chair Powell when his term ends, signs of decent dollar demand at the 10-yr note auction, and the FOMC Minutes for the June 17-18 meeting, which conveyed a stronger expectation of rate cuts before the end of the year than no rate cuts at all.
• Yield Check:
  • 2-yr: -5 bps to to 3.86%
  • 3-yr: -4 bps to 3.83%
  • 5-yr: -7 bps to 3.92%
  • 10-yr: -8 bps to 4.34%
  • 30-yr: -6 bps to 4.88%

• News:
  • President Trump says seven tariff letters going out this morning and more to follow. Truth Social
  • Senator Lindsey Graham's Russia sanctions legislation will impose a 500% tariff on imports from any country that purchases Russian uranium and oil (USO, XLE, CCJ, NLR). The Hill
  • House Speaker Mike Johnson and Senate Majority Leader John Thune say Congress will vote on Russian sanctions later this month, according to Politico
  • FOMC Minutes conveyed a view that "most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate."
  • Kevin Hassett is now a serious contender for Fed Chairman next year. WSJ
  • The EU is reportedly willing to accept a temporary 10% reciprocal tariff while continuing trade discussions with the Trump administration
  • The Supreme Court allows the Trump administration to conduct mass firings at federal agencies, which could result in tens of thousands of job losses. NY Times
  • China's CPI for June deflated for the sixth time over the past eight months, pointing to ongoing weakness in consumption, while PPI deflated for the 33rd consecutive month.
  • President Trump delayed tariffs after Treasury Secretary Scott Bessent advised him to give trade deals more time. WSJ
  • Treasury Secretary Scott Bessent says tariffs will generate $300 bln in revenue for the federal government this year. Reuters
  • RBNZ leaves its official policy rate unchanged at 3.25%, as expected
  • China's June CPI -0.1% m/m (expected 0.0%; last -0.2%); 0.1% yr/yr (expected -0.1%; last -0.1%). June PPI -3.6% yr/yr (expected -3.2%; last -3.3%)
• Today's Data:
  • MBA Mortgage Applications Index +9.4% (prior +2.7%)
  • May Wholesale Inventories -0.3% (Briefing.com consensus: -0.3%) following downwardly revised 0.1% increase (from 0.2%) in April
  • $39 bln 10-yr note auction sees high yield of 4.362% slightly stop through when issued yield of 4.365% on solid dollar demand
• Commodities:
  • WTI crude: +0.2% to $68.40/bbl
  • Gold: +0.1% to $3321.00/ozt
  • Copper: -1.4% to $5.50/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1713
  • GBP/USD: +0.1% to 1.3588
  • USD/CNH: +0.1% to 7.1844
  • USD/JPY: -0.2% to 146.35
• The Day Ahead:
  • 08:30 ET: Initial Jobless Claims (Briefing.com consensus: 245K; prior 233K) and Continuing Jobless Claims (prior 233K)
  • 10:30 ET: EIA Natural Gas Inventories (prior +55 bcf)
  • 13:00 ET: $22 bln 30-yr bond reopening