Bond Market Update

Most Tenors Pad Recent Gains

• U.S. Treasuries had a mixed finish to the week, as 10s and shorter tenors recorded their fourth day of gains in a row while the long bond underperformed, finishing with a slim loss. The Friday session was rather uneventful despite the mixed finish. The 10-yr note and shorter tenors started the day with modest gains while the 30-yr bond underperformed from the open after a night that saw renewed volatility in global technology stocks. The first hour of action saw some light selling that found support immediately after 5s an 10s made a brief appearance in the red. The next couple hours saw a rise to highs across the curve, but the long bond never made it into the green. The trading range narrowed into the afternoon with Treasuries holding just below their highs into the close. The 10-yr yield settled at its lowest level in nearly eight weeks while the 2-yr yield ended at its lowest level in more than a week after closing at its highest level since February 2025 on Monday. Crude oil fell below $70/bbl, giving up more than $6/bbl for the week, while the U.S. Dollar Index slipped 0.1% to 101.35, inching away from a 13-month high that was set on Wednesday.
• Yield Check:
  • 2-yr: -3 bps to 4.09% (-9 bps this week)
  • 3-yr: -3 bps to 4.09% (-10 bps this week)
  • 5-yr: -3 bps to 4.13% (-10 bps this week)
  • 10-yr: -2 bps to 4.37% (-8 bps this week)
  • 30-yr: +1 bp to 4.86% (-4 bps this week)

• News:
  • Minneapolis Fed President (FOMC voter) Kashkari said that he currently expects one rate hike in 2026.
  • 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 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 includes a 14-year, $2.3 trln, investment outline for AI and energy.
  • 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).
• Today's Data:
  • The final reading for the University of Michigan Consumer Sentiment Index for June increased to 49.5 (Briefing.com consensus: 48.9) from the preliminary reading of 48.9. In the same period a year ago, the index stood at 60.7.
    • The key takeaway from the report is that sentiment was boosted by the moderation in gas prices; however, the higher cost of living in general remains a burden, as sentiment is still 13% below the level it stood at in February prior to the start of the Iran War and almost 20% less than the prior year period.
  • The advance goods trade deficit widened to $105.8 bln in May from a revised deficit of $83.0 bln (from -$82.4 bln) in April.
  • Advance Retail Inventories were up 0.6% in May after increasing 0.7% in April.
  • Advance Wholesale Inventories were up 0.3% in May after increasing a revised 0.7% (from 0.5%) in April.
• Commodities:
  • WTI crude: -3.8% to $69.24/bbl
  • Gold: +1.2% to $4096.70/ozt
  • Copper: +2.1% to $6.21/lb
• Currencies: 
  • EUR/USD: +0.1% to 1.1386
  • GBP/USD: +0.1% to 1.3199
  • USD/CNH: +0.1% to 6.8031
  • USD/JPY: UNCH at 161.72
• The Week Ahead: 
  • Monday: Nothing of note
  • Tuesday: April FHFA Housing Price Index (Briefing.com consensus 0.2%; prior 0.1%) and April S&P Case-Shiller Home Price Index (Briefing.com consensus 0.9%; prior 0.8%) at 9:00 ET; June Chicago PMI (Briefing.com consensus 60.0; prior 62.7) at 9:45 ET; and June Consumer Confidence (Briefing.com consensus 94.2; prior 93.1) at 10:00 ET
  • Wednesday: Weekly MBA Mortgage Index (prior 1.0%) at 7:00 ET; June ADP Employment Change (Briefing.com consensus 112,000; prior 122,000) at 8:15 ET; final June S&P Global U.S. Manufacturing PMI (prior 55.7) at 9:45 ET; May Construction Spending (Briefing.com consensus 0.5%; prior 0.4%) and June ISM Manufacturing Index (Briefing.com consensus 53.8%; prior 54.0%) at 10:00 ET; and weekly crude oil inventories (prior -6.09 mln) at 10:30 ET
  • Thursday: June Nonfarm Payrolls (Briefing.com consensus 110,000; prior 172,000), Nonfarm Private Payrolls (Briefing.com consensus 88,000; prior 120,000), Unemployment Rate (Briefing.com consensus 4.3%; prior 4.3%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), Average Workweek (Briefing.com consensus 34.3; prior 34.3), weekly Initial Claims (Briefing.com consensus 220,000; prior 215,000), and Continuing Claims (prior 1.821 mln) at 8:30 ET; May Factory Orders (Briefing.com consensus 1.5%; prior 4.8%) at 10:00 ET; and weekly natural gas inventories (prior +76 bcf) at 10:30 ET; Treasury market to close at 14:00 ET
  • Friday: Bond and equity markets closed in observance of Independence Day