Bond Market Update

Longer Tenors Lead

• U.S. Treasuries are on track for a higher start with longer tenors expected to pace the early advance while the short end is a bit behind. Treasury futures inched higher in evening trade, finding some short-lived pressure as the focus turned from Asia to Europe. There was some overall improvement in equity sentiment in Asia after yesterday's volatility. The overnight data slate was on the light side, leaving the focus on overall price action. The data flow during the U.S. session will also be subdued with potential for some volatility surrounding the 10:00 ET release of May New Home Sales (Briefing.com consensus 627,000; prior 622,000). Later in the day, the U.S. Treasury will sell $70 bln in 5-yr notes. Crude oil is falling past $72/bbl while the U.S. Dollar Index is up 0.3% at 101.68.
• Yield Check:
  • 2-yr: -1 bp to 4.18%
  • 3-yr: -2 bps to 4.19%
  • 5-yr: -2 bps to 4.24%
  • 10-yr: -2 bps to 4.47%
  • 30-yr: -3 bps to 4.91%

• News:
  • President Trump said that the Department of Justice will investigate major energy companies for price gouging.
  • An adviser from the People's Bank of China said that rate cuts are still possible this year.
  • MSCI extended its review of Indonesia's market classification and chose not to upgrade South Korea to developed market status due to currency-related concerns.
  • Rheinmetall has plunged to its lowest level since early 2025 after Germany canceled its plan to build six warships and purchase frigates from ThyssenKrupp instead.
  • Sweden's central bank indicated readiness to raise rates in its meeting minutes for June.
  • Japan's May Corporate Services Price Index was up 3.3% yr/yr, as expected (last 3.3%).
  • Australia's May Monthly CPI Indicator decelerated to 4.0% from 4.2% (expected 4.3%).
  • Germany's June ifo Business Climate Index rose to 85.6 from 85.0, as expected. June Current Assessment rose to 87.0 from 86.1 (expected 86.0) and June Business Expectations rose to 84.1 from 83.9 (expected 85.0).
  • Swiss June ZEW Expectations fell to -25.0 from -11.1.
• Commodities:
  • WTI Crude: -2.4% to $71.47/bbl
  • Gold: -2.0% to $4065.30/ozt
  • Copper: -1.5% to $6.059/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1348
  • GBP/USD: -0.2% to 1.3171
  • USD/CNH: +0.3% to 6.8128
  • USD/JPY: +0.1% to 161.64
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 1.0%; prior -3.8%)
  • 8:30 ET: Q1 Current Account Balance (Briefing.com consensus -$237.5 bln; prior -$190.7 bln)
  • 10:00 ET: May New Home Sales (Briefing.com consensus 627,000; prior 622,000)
  • 10:30 ET: Weekly crude oil inventories (prior -8.26 mln)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results