Bond Market Update

Lower Start Ahead

• U.S. Treasuries are on track for a slightly lower start after a steady retreat in the overnight futures market. Treasury futures began facing pressure on Sunday evening, continuing their retreat into the night. However, the selling took place at a slow pace, lifting yields by no more than three basis points across the curve. Overall participation was on the light side due to a summer bank holiday in the U.K. Asian equities had a strong showing with Hong Kong's Hang Seng (+1.9%) and China's Shanghai Composite (+1.5%) reaching multi-year highs while European stocks trade modestly lower. Economic data during the U.S. session will be limited to the 10:00 ET release of New Home Sales (Briefing.com consensus 630,000; prior 627,000) for July. Crude oil is on the rise while the U.S. Dollar Index is up 0.3% at 97.99.
• Yield Check:
  • 2-yr: +3 bps to 3.72%
  • 3-yr: +3 bps to 3.67%
  • 5-yr: +2 bps to 3.78%
  • 10-yr: +2 bps to 4.28%
  • 30-yr: +3 bps to 4.91%

• News:
  • Fitch affirmed the AA+ rating of the U.S. with a Stable outlook. 
  • Japan's June Leading Index was up 0.8% m/m (expected 1.3%; last 0.6%) and Coincident Indicator was up 0.7% m/m (expected 0.8%; last 0.0%).
  • Singapore's July CPI was down 0.4% m/m (last -0.1%) but up 0.6% yr/yr (expected 0.7%; last 0.8%). July Core CPI was up 0.5% yr/yr (last 0.6%).
  • New Zealand's Q2 Retail Sales rose 0.5% qtr/qtr (expected 0.1%; last 0.8%), increasing 0.7% yr/yr (expected -0.3%; last 0.4%).
  • Germany's August ifo Business Climate Index hit 89.0 (expected 88.7; last 88.6). August Current Assessment dipped to 86.4 from 86.5 (expected 86.7) and Business Expectations rose to 91.6 from 90.8 (expected 90.2).
  • Swiss Q2 Employment increased to 5.532 mln from 5.512 mln. · Spain's July PPI was up 0.3% yr/yr (last 0.8%).
• Commodities:
  • WTI Crude: +0.7% to $64.12/bbl
  • Gold: -0.1% to $3414.20/ozt
  • Copper: +0.5% to $4.480/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1698
  • GBP/USD: UNCH at 1.3517
  • USD/CNH: -0.2% to 7.1588
  • USD/JPY: +0.3% to 147.33
• Data out Today:
  • 10:00 ET: July New Home Sales (Briefing.com consensus 630,000; prior 627,000)