Bond Market Update

Solid Start Ahead

• U.S. Treasuries are on track for a firmly higher start with shorter tenors expected to show slight relative strength in the early going. Treasury futures opened the week on a higher note, having spent the overnight session in a sideways range while equity futures climbed alongside other global stock markets. The positive sentiment was owed to news that the U.S. and Iran plan to sign a peace deal on Friday. Even with the deal, there will still be a 60-day negotiation period pertaining to Iran's nuclear program, but markets have been encouraged by the developments regardless. The overnight session featured the release of a sizable bath of data, though there were no big surprises. The Bank of Japan is scheduled to meet overnight with the market expecting a 25-basis point rate hike announcement. Crude oil is falling to its lowest level since early March while the U.S. Dollar Index is down 0.2% at 99.52.
• Yield Check:
  • 2-yr: -4 bps to 4.05%
  • 3-yr: -3 bps to 4.10%
  • 5-yr: -3 bps to 4.18%
  • 10-yr: -3 bps to 4.46%
  • 30-yr: -2 bps to 4.96%

• News:
  • China Securities Journal reported that the Chinese government will accelerate IPOs for technology companies.
  • The Bank of Japan is expected to announce a 25-basis point rate hike overnight.
  • The Reserve Bank of Australia will meet overnight, but a rate change is not expected.
  • NZIER lowered its forecast for New Zealand's 2026 growth to 0.6% from 0.8% while the outlook for 2027 was lowered to 1.6% from 3.0%.
  • The U.K. will hold another by-election on Thursday, which could trigger a leadership challenge to Prime Minister Starmer.
  • market has curtailed its rate hike expectations for the U.K., now pricing in just one rate hike before the end of the year.
  • President Trump said that France has to rescind its tech sales tax or face a 100% tariff on wine imports to the U.S.
  • Japan's April Tertiary Industry Activity fell to -10.6 from 16.0.
  • South Korea's May trade surplus reached $27.04 bln (expected surplus of $26.95 bln; last surplus of $23.76 bln) as imports grew 20.7% yr/yr (expected 20.8%; last 16.7%) and exports jumped 53.4% (expected 53.2%; last 48.0%).
  • India's May WPI Inflation was up 9.68% yr/yr (expected 9.10%; last 8.26%) and May trade deficit reached $28.21 bln (last deficit of $28.38 bln).
  • New Zealand's May Electronic Card Sales Retail Sales were up 1.7% m/m (last -1.2%), rising 3.3% yr/yr (last 2.0%).
  • Singapore's Q1 Unemployment Rate remained at 2.0% (expected 2.1%).
  • Eurozone's April Industrial Production was up 0.1% m/m (expected 0.2%; last 0.4%), rising 0.3% yr/yr (last -2.8%).
  • Germany's May WPI was down 0.6% m/m (expected 0.8%; last 2.0%) but up 5.9% yr/yr (last 6.3%).
  • Italy's April trade surplus reached EUR4.293 bln (expected surplus of EUR5.190 bln; last surplus of EUR4.709 bln).
  • Swiss May PPI was down 0.4% m/m (expected 0.4%; last 0.8%), falling 1.8% yr/yr (last -2.0%). May SECO Consumer Climate rose to -38 from -40, as expected.
• Commodities:
  • WTI Crude: -5.4% to $80.30/bbl
  • Gold: +2.8% to $4357.20/ozt
  • Copper: +1.0% to $6.51/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1610
  • GBP/USD: +0.1% to 1.3423
  • USD/CNH: UNCH at 6.7584
  • USD/JPY: UNCH at 160.18
• Data out Today:
  • 8:30 ET: June Empire State Manufacturing survey (Briefing.com consensus 12.5; prior 19.6)
  • 9:15 ET: May Industrial Production (Briefing.com consensus 0.2%; prior 0.7%) and Capacity Utilization (Briefing.com consensus 76.2%; prior 76.1%)
  • 10:00 ET: June NAHB Housing Market Index (Briefing.com consensus 37; prior 37)