Bond Market Update

Trimming Monday Losses

• U.S. Treasuries are on track for a higher start that will reverse a good chunk of yesterday's losses in shorter tenors. Treasury futures began inching higher in early evening trade, accelerating their advance as the night went on amid significant pressure on global equity sentiment. Mounting concerns about aggressive investment spending of giant tech companies and news of a $20 bln bond sale by SpaceX (SPCX) contributed to the overnight pressure on sentiment. The overnight data flow included the release of flash PMI readings from major economies with reports from Europe reflecting a continuation of anemic activity. The U.S. session will also see the release of flash Manufacturing and Services PMI readings for June and the U.S. Treasury will sell $69 bln in 2-yr notes this afternoon. Crude oil hovers near $74/bbl while the U.S. Dollar Index is up 0.3% at 101.27.
• Yield Check:
  • 2-yr: -3 bps to 4.20%
  • 3-yr: -4 bps to 4.21%
  • 5-yr: -4 bps to 4.25%
  • 10-yr: -2 bps to 4.49%
  • 30-yr: -1 bp to 4.94%

• News:
  • MSCI is expected to announce its decision about a potential downgrade to Indonesia's market status tomorrow.
  • European Central Bank Chief Economist Lane said that he expects energy prices to keep inflation firmly above target into the first half of next year.
  • German Chancellor Merz said that pension reforms will be implemented, including a higher retirement age and no early retirement option without reduction of benefits.
  • Japan's flash June Manufacturing PMI hit 54.9 (expected 54.5; last 54.5) and flash June Services PMI hit 51.8 (last 50.0). April BoJ Core CPI was up 2.7% yr/yr (last 2.8%).
  • South Korea's June Consumer Confidence hit 106.6 (last 106.1).
  • Australia's flash June Manufacturing PMI hit 51.2 (last 50.7) and flash June Services PMI hit 49.9 (last 48.7).
  • Hong Kong's May CPI was unchanged m/m (last -0.1%), rising 2.0% yr/yr (last 1.7%).
  • Singapore's May CPI was up 0.7% m/m (last -0.3%), rising 1.8% yr/yr (expected 2.0%; last 1.8%). Core CPI was up 1.4% yr/yr (expected 1.6%; last 1.4%).
  • India's flash June Manufacturing PMI hit 54.5 (last 55.0) and flash June Services PMI hit 57.3 (last 59.8).
  • Eurozone's flash June Manufacturing PMI hit 51.3 (expected 51.6; last 51.6) and flash Services PMI hit 48.9 (expected 48.6; last 47.7).
  • Germany's flash June Manufacturing PMI hit 50.0 (expected 50.3; last 50.1) and flash Services PMI hit 46.8 (expected 49.0; last 48.1).
  • U.K.'s flash June Manufacturing PMI hit 53.1 (expected 53.5; last 53.9) and flash Services PMI hit 48.7 (expected 50.1; last 49.3). June CBI Distributive Trends Orders fell to -45 from -41 (expected -33).
  • France's June Business Survey fell to 100 from 102 (expected 101). Flash June Manufacturing PMI hit 50.7 (expected 50.2; last 49.7) and flash Services PMI hit 47.4 (expected 45.9; last 44.3).
  • Spain's April trade deficit reached EUR5.20 bln (last deficit of EUR4.40 bln).
• Commodities:
  • WTI Crude: +0.2% to $74.03/bbl
  • Gold: -1.6% to $4136.90/ozt
  • Copper: -3.1% to $6.167/lb
• Currencies:
  • EUR/USD: -0.4% to 1.1385
  • GBP/USD: -0.3% to 1.3209
  • USD/CNH: +0.2% to 6.7907
  • USD/JPY: UNCH at 161.60
• Data out Today:
  • 9:45 ET: Flash June S&P Global U.S. Manufacturing PMI (prior 55.1) and flash June S&P Global U.S. Services PMI (prior 50.7)
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results