Bond Market Update

Inching Higher

• U.S. Treasuries are on track for a slightly higher start after yesterday's retreat across the curve. Treasury futures spent the first half of the night in a slow retreat that was partially reversed over the past couple hours. The overnight session saw the release of final August Services PMI readings from major economies with Japan (53.1; expected 52.7) and China (53.0; expected 52.4) beating expectations while the eurozone's reading (50.5; expected 50.7) was shy of estimates. Yields on long-term Japanese and British debt hit fresh highs, making for a continuation of the recent selling. Japan's 30-yr yield reached a fresh record near 3.18% while the 20-yr yield climbed to 2.66%, a level not seen in 26 years. The U.K.'s 30-yr Gilt yield, for its part, hit a record of 5.75% before rebounding. The U.S. session will not feature any top-tier data but the 10:00 ET release of the Job Openings and Labor Turnover Survey for July could be noteworthy given the growing focus on the labor market. Crude oil is giving back yesterday's gain while the U.S. Dollar Index is down 0.1% at 98.35.
• Yield Check:
  • 2-yr: -1 bp to 3.65%
  • 3-yr: -1 bp to 3.62%
  • 5-yr: UNCH at 3.74%
  • 10-yr: -1 bp to 4.27%
  • 30-yr: -1 bp to 4.96%

• News:
  • Japan's Prime Minister Ishiba repeated that he intends to maintain his post, but his party may call a leadership election.
  • European Central Bank policymaker de Cos acknowledged the weakening growth outlook but also said that the central bank's main priority is fighting inflation.
  • China's August S&P Global Services PMI hit 53.0 (expected 52.4; last 52.6).
  • Japan's August Services PMI hit 53.1 (expected 52.7; last 52.7).
  • South Korea's Q2 GDP expanded 0.7% qtr/qtr (expected 0.6%; last 0.6%), growing 0.6% yr/yr (expected 0.5%; last 0.5%).
  • India's August Services PMI hit 62.9 (expected 65.6; last 60.5).
  • Hong Kong's August Manufacturing PMI hit 50.7 (last 49.2).
  • Australia's Q2 GDP expanded 0.6% qtr/qtr (expected 0.5%; last 0.3%), growing 1.8% yr/yr (expected 1.6%; last 1.4%). August Services PMI hit 55.8 (expected 55.1; last 54.1) and August AIG Manufacturing Index hit -20.9 (last -23.9).
  • Eurozone's August Services PMI hit 50.5 (expected 50.7; last 51.0). July PPI was up 0.4% m/m (expected 0.2%; last 0.8%), rising 0.2% yr/yr (expected 0.1%; last 0.6%).
  • Germany's August Services PMI hit 49.3 (expected 50.1; last 50.6).
  • U.K.'s August Services PMI hit 54.2 (expected 53.6; last 51.8).
  • France's August Services PMI hit 49.8 (expected 49.7; last 48.5).
  • Italy's August Services PMI hit 51.5 (expected 52.1; last 52.3).
  • Spain's August Services PMI hit 53.2 (expected 54.4; last 55.1).
• Commodities:
  • WTI Crude: -2.0% to $64.24/bbl
  • Gold: +0.7% to $3616.30/ozt
  • Copper: -0.2% to $4.632/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1651
  • GBP/USD: +0.2% to 1.3411 
  • USD/CNH: +0.1% to 7.1445
  • USD/JPY: +0.2% to 148.62
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.2%; prior -0.5%)
  • 10:00 ET: July Factory Orders (Briefing.com consensus -1.4%; prior -4.8%) and July Job Openings (prior 7.437 mln)
  • 14:00 ET: September Beige Book