Bond Market Update

Sailing through the Doldrums

• U.S. Treasuries saved their best for the overnight trade, garnering support from sliding oil prices and an early indication that the U.S. stock market would open today's session with a negative bias. The gains seen overnight, however, would largely be retraced during the cash session when both oil prices and stock prices reversed course from their overnight disposition. The S&P 500, for its part, managed to climb to yet another record high following an initial 0.2% pullback. A solid JOLTS—Job Openings Report for April at 10:00 a.m. ET also took some wind out of the Treasury market's sails. From then on, it was mostly sailing through the doldrums, as the Treasury market held to a tight, sideways range for the remainder of the cash session. The U.S. Dollar Index was flat at 99.20.
• Yield Check:
  • 2-yr: unch at 4.05%
  • 3-yr: unch at 4.10%
  • 5-yr: -1 bp to 4.18%
  • 10-yr: -3 bps to 4.45%
  • 30-yr: -2 bps to 4.97%

• News:
  • President Trump says he spoke with Israeli Prime Minister Benjamin Netanyahu and told him to stop the shooting in Lebanon. Mr. Trump thinks he will have an agreement with Iran to extend the ceasefire and reopen the Strait of Hormuz "over the next week."
  • President Trump said in a Truth Social post that reports suggesting the U.S. and Iran stopped speaking a few days ago are false and erroneous
  • Israel launched new strikes in southern Lebanon after pulling back from striking Beirut following request from President Trump, according to NY Times
  • Mexico supports extending USMCA trade agreement by 16 years, according to Reuters
  • White House adjusts the tariffs on agricultural equipment, like combines and harvesters, as well as certain other equipment, from 25% to 15%; also adjusts certain metals tariffs.
  • USTR proposes additional 25% tariff on imports from Brazil, excluding goods subject to Section 232 tariffs
  • There are reports that the European Commission is discussing plans to allow countries more fiscal flexibility as they deal with attempts to mitigate the impact of higher energy costs.
  • CMS launches nationwide framework to implement Medicaid work requirements.
  • Chatter about a possible rate hike by the Bank of Korea was ignited by a hotter-than-expected CPI report for May that featured the highest annualized rate (3.1%) since early 2024.
  • The Bank of Korea is expecting the inflation rate to maintain a 3-handle for some time.
  • The PBOC's open market operations included a fund injection of just CNY200 mln, which was the smallest OMO since 2015.
  • Eurozone's May CPI 0.1% m/m (last 1.0%) and 3.2% yr/yr (expected 3.2%; last 3.0%); May core CPI 0.3% m/m (last 0.9%) and 2.5% yr/yr (expected 2.4%; last 2.2%)
• Today's Data:
  • April JOLTS—Job Openings 7.618 million versus upwardly revised 6.887 million (from 6.866 million) for March
• Commodities: 
  • WTI crude: +1.8% to $93.83/bbl
  • Gold: +0.2% to $4519.90/ozt
  • Copper: +1.7% to $6.66/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1620
  • GBP/USD: flat at 1.3459
  • USD/CNH: flat at 6.7635
  • USD/JPY: +0.2% to 159.95
• The Day Ahead:
  • 07:00 ET: MBA Mortgage Applications Index (prior -8.5%)
  • 08:15 ET: May ADP EMployment Change (Briefing.com consensus: 110K; prior 109K)
  • 09:45 ET: May S&P Global U.S. Services PMI - Final (prior 50.9)
  • 10:00 ET: April Factor Orders (Briefing.com consensus: 3.5%; prior 1.5%)
  • 10:00 ET: May ISM Non-Manufacturing Index (Briefing.com consensus: 53.6%; prior 53.6%)
  • 14:00 ET: Fed's Beige Book