Bond Market Update

 Mixed Start Ahead

• U.S. Treasuries are on track for a mixed start with shorter tenors expected to show some relative weakness in the early going while the long bond is set for a higher open. Treasury futures saw a continuation of yesterday's post-FOMC divergence with relative weakness up front, as the market got its first chance to respond to Kevin Warsh's public debut as Fed Chairman. The FOMC decision was followed by more central bank announcements in Asia and Europe with rate hikes in Philippines and Indonesia, while the Bank of England, Swiss National Bank, and Norges Bank held their policy steady. The U.S. session will feature a modest data slate ahead of tomorrow's holiday closure. Crude oil hovers near $75/bbl after President Trump signed the peace deal with Iran while the U.S. Dollar Index is up 0.7% at 100.76.
• Yield Check:
  • 2-yr: +4 bps to 4.20%
  • 3-yr: +3 bps to 4.21%
  • 5-yr: +2 bps to 4.25%
  • 10-yr: UNCH at 4.46%
  • 30-yr: -5 bps to 4.88%

• News:
  • Bank of Japan Deputy Governor Himino will take part in a semiannual monetary policy testimony tomorrow.
  • Australian Securities and Investments Commission warned about the quality of private credit.
  • China launched the third round of its consumer goods trade-in program after a contraction in May Retail Sales.
  • Bangko Sentral ng Pilipinas raised its policy rate by 25 bps to 4.75%.
  • Bank Indonesia raised its policy rate by 25 bps to 5.75%.
  • The Bank of England left its bank rate at 3.75%, as expected.
  • The Swiss National Bank left its policy rate at 0.00%, as expected.
  • Norges Bank left its policy rate at 4.25% but hinted at a rate hike later this year.
  • European Central Bank policymaker Kocher said that inflation will stay higher for some time and that the ECB remains ready to act.
  • New Zealand's Q1 GDP expanded 0.8% qtr/qtr, as expected (last 0.5%), growing 1.5% yr/yr (expected 1.1%; last 1.5%).
  • Eurozone's April Current Account surplus reached EUR15.7 bln (expected surplus of EUR18.5 bln; last surplus of EUR14.9 bln). April Construction Output was up 0.6% m/m (last 1.8%).
  • U.K.'s April three-month employment increased by 100,000 (expected 75,000; last 148,000), April Average Earnings Index + Bonus was up 4.4% yr/yr (expected 4.0%; last 4.4%). April Unemployment Rate fell to 4.9% from 5.0% (expected 5.0%) and May Claimant Count Change reached 31,200 (expected 25,800; last 8,300).
• Commodities:
  • WTI Crude: -1.6% to $75.53/bbl
  • Gold: -2.7% to $4261.70/ozt
  • Copper: -2.0% to $6.364/lb
• Currencies:
  • EUR/USD: -0.4% to 1.1459
  • GBP/USD: -0.6% to 1.3213
  • USD/CNH: UNCH at 6.7763
  • USD/JPY: +0.2% to 160.92
• Data out Today:
  • 8:30 ET: June Philadelphia Fed survey (Briefing.com consensus 10.0; prior -0.4), weekly Initial Claims (Briefing.com consensus 226,000; prior 229,000), and Continuing Claims (prior 1.795 mln)
  • 10:30 ET: Weekly natural gas inventories (prior 108 bcf)
  • 16:00 ET: April Net Long-Term TIC Flows (prior $81.3 bln)