Bond Market Update

Short End Ahead

• U.S. Treasuries are on track for a modestly higher start in most tenors while the long bond is set for a lower start. Treasury futures climbed in early evening action, remaining near their best level s of the night during the early portion of the European session. The advance in Treasury futures has been accompanied by slimmer gains in other sovereign debt while global equity markets had another rough outing with chip-related names remaining at the forefront of the volatility. The overnight data flow was on the light side, and it will remain that way during the U.S. session. However, it is worth noting that Japan is planning some significant changes to its overall fiscal structure. Prime Minister Takaichi indicated that her government plans to shift away from annual extra budgets in favor of annual bond issuance. In addition, Finance Minister Katayama proposed a framework that would link spending to most predictable revenue streams like taxes, bond issuance, and spending cuts. The plan would include a 14-year, $2.3 trln, investment plan for AI and energy. Crude oil has fallen back to $70/bbl, seeking its lowest close since late February, while the U.S. Dollar Index is down 0.2% at 101.24.
• Yield Check:
  • 2-yr: -2 bps to 4.10%
  • 3-yr: -2 bps to 4.10%
  • 5-yr: -1 bp to 4.15%
  • 10-yr: UNCH at 4.39%
  • 30-yr: +2 bps to 4.88%

• News:
  • OpenAI is looking to delay its IPO until 2027, according to The New York Times.
  • Near-term consumer inflation expectations in the eurozone decelerated slightly to 3.5% from 3.9%, according to a survey from the European Central Bank. 
  • Japan's June Tokyo CPI was up 1.7% yr/yr (prior 1.4%) and Tokyo Core CPI was up 1.6% yr/yr (expected 1.6%; prior 1.3%).
  • Singapore's May Industrial Production fell 0.7% m/m (expected 2.0%; last 6.2%) but was up 13.0% yr/yr (expected 17.0%; last 16.5%).
  • France's May jobseekers reached 3.116 mln (prior 3.100 mln).
  • Italy's June Business Confidence rose to 88.4 from 87.9, as expected, and Consumer Confidence fell to 92.4 from 93.4 (expected 94.5). May non-EU trade surplus reached EUR3.84 bln (prior surplus of EUR3.85 bln).
• Commodities:
  • WTI Crude: -2.5% to $70.11/bbl
  • Gold: +0.4% to $4061.60/ozt
  • Copper: +0.5% to $6.103/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1398
  • GBP/USD: +0.2% to 1.3214
  • USD/CNH: +0.1% to 6.8056
  • USD/JPY: -0.1% to 161.67
• Data out Today:
  • 8:30 ET: May advance International Trade in Goods (prior -$82.4 bln), advance Retail Inventories (prior 0.7%), and advance Wholesale Inventories (prior 0.5%)
  • 10:00 ET: Final June University of Michigan Consumer Sentiment (Briefing.com consensus 48.9; prior 48.9)