Bond Market Update

Steady Start Ahead

• U.S. Treasuries are on track for a flat start after a quiet night in the futures market. Treasury futures spent early evening trade in a sideways range, inching to highs shortly after the focus turned to action in Europe. However, the slim gains were reversed over the past few hours, as Treasury futures returned to little changed. Movement in other sovereign debt has also been limited while global equity markets have had a mixed showing. Chip giant NVIDIA (NVDA) beat quarterly expectations last evening, but the report was marred by weaker-than-expected growth in the data center unit, inviting some questions about the strength of AI growth. The U.S. session will feature the release of the second estimate of Q2 GDP (Briefing.com consensus 3.0%) at 8:30 ET and the U.S. Treasury will sell $44 bln in 7-yr notes later today. Crude oil holds a slim loss while the U.S. Dollar Index is down 0.3% at 97.94.
• Yield Check:
  • 2-yr: +1 bp to 3.63%
  • 3-yr: +1 bp to 3.60%
  • 5-yr: UNCH at 3.71%
  • 10-yr: -1 bp to 4.23%
  • 30-yr: UNCH at 4.91%

• News:
  • Mexico will raise tariffs on imports from China as part of its budget for 2026, according to Bloomberg.
  • Japan's top trade negotiator postponed his trip to Washington until next week.
  • The Bank of Korea left its policy rate at 2.50%, as expected.
  • Toyota's July global sales hit a record with help from a jump in exports ahead of the implementation of tariffs.
  • Expectations are on the rise for French Prime Minister Bayrou to lose his confidence vote that is scheduled for September 8.
  • India's July Industrial Production was up 3.5% yr/yr (expected 2.1%; last 1.5%) and July Manufacturing Output was up 5.4% m/m (last 3.9%).
  • Australia's Q2 Building Capital Expenditure rose 0.2% qtr/qtr (last 1.0%), Q2 Plant/Machinery Capital Expenditure rose 0.3% qtr/qtr (last -1.7%), and Private New Capital Expenditure rose 0.2% qtr/qtr (expected 0.8%; last -0.2%).
  • New Zealand's August ANZ Business Confidence rose to 49.7 from 47.8.
  • Eurozone's July Private Sector Loans were up 2.4% yr/yr, as expected (last 2.2%) and Loans to nonfinancials rose 2.8% yr/yr (last 2.7%). August Business and Consumer Survey fell to 95.2 from 95.7 (expected 96.0).
  • Italy's August Business Confidence fell to 87.4 from 87.8 (expected 87.2) and Consumer Confidence fell to 96.2 from 97.2 (expected 96.6). July Industrial Sales were up 1.2% m/m (last -2.1%), rising 0.3% yr/yr (last -1.8%).
  • Swiss Q2 GDP rose 0.1% qtr/qtr, as expected (last 0.4%), growing 1.2% yr/yr (expected 1.4%; last 1.8%).
• Commodities:
  • WTI Crude: -0.1% to $64.11/bbl
  • Gold: +0.4% to $3462.60/ozt
  • Copper: +0.2% to $4.43/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1665
  • GBP/USD: +0.2% to 1.3517
  • USD/CNH: -0.4% to 7.1272
  • USD/JPY: -0.3% to 146.93
• Data out Today:
  • 8:30 ET: Q2 GDP -- Second Estimate (Briefing.com consensus 3.0%; prior 3.0%), Q2 GDP Deflator -- Second Estimate (Briefing.com consensus 2.0%; prior 2.0%), weekly Initial Claims (Briefing.com consensus 236,000; prior 235,000), and Continuing Claims (prior 1.972 mln)
  • 10:00 ET: July Pending Home Sales (Briefing.com consensus 0.3%; prior -0.8%)
  • 10:30 ET: Weekly natural gas inventories (prior +13 bcf)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results