Bond Market Update

Quiet Start to Short Week

• U.S. Treasuries started the holiday week on a quiet note with 10s and shorter tenors finishing lower for the first time since last Monday while the long bond outperformed, settling just above its unchanged level. Treasuries and other sovereign debt saw very little movement on Monday while equity sentiment improved with renewed buying interest in U.S.-listed chip stocks. Treasuries spent the session near their flat lines with shorter tenors lagging through the day, keeping yields just above last week's lows. Investors did not receive any data today, but a few noteworthy reports will be released this week, concluding with the June Employment Situation report (Briefing.com consensus 110,000; prior 172,000) on Thursday morning. Today's slight retreat kept the 5-yr yield just above its 50-day moving average (4.131%). Crude oil climbed back above $70/bbl while the U.S. Dollar Index fell 0.3% to 101.09, masking the greenback's rise to its highest level against the yen since December 1986.
• Yield Check:
  • 2-yr: +2 bps to 4.11%
  • 3-yr: +2 bps to 4.11%
  • 5-yr: +1 bp to 4.14%
  • 10-yr: UNCH at 4.37%
  • 30-yr: UNCH at 4.86%

• News:
  • The Supreme Court ruled that the president can fire independent agency heads but cannot fire Federal Reserve officials.
  • Standard & Poor's affirmed the U.S. AA+ rating with a Stable outlook. 
  • Fed Chairman Warsh will speak at the European Central Bank's policy forum in Portugal on Wednesday.
  • China's Ministry of Commerce added 20 Japanese companies to its export control list.
  • The People's Bank of China conducted its inaugural round of overnight repurchase operations.
  • China's May Industrial Profit was up 18.8% YTD (last 18.2%).
  • Japan's May Retail Sales rose 5.3% yr/yr (expected 3.1%; last 2.8%) and Large Retail Sales increased 5.3% yr/yr (expected 3.1%; last 2.8%).
  • India's May Industrial Production was up 5.1% yr/yr (expected 4.7%; last 4.9%) and May Manufacturing Production was up 5.5% m/m (last 6.2%).
  • Eurozone's May Private Sector Loans rose 3.1% yr/yr (expected 2.9%; last 3.0%) and loans to nonfinancials were up 4.0% yr/yr (last 3.4%). June Business and Consumer Survey rose to 95.0 from 93.7 (expected 94.3).
  • U.K.'s May Mortgage Approvals reached 56,210 (expected 63,000; last 66,030) and Mortgage Lending reached GBP2.89 bln (expected GBP4.60 bln; last GBP4.44 bln).
  • Spain's June CPI was up 0.6% m/m (last 0.1%), rising 3.2% yr/yr, as expected (last 3.2%). June Core CPI was up 2.9% yr/yr (last 2.9%).
• Commodities:
  • WTI crude: +2.3% to $70.82/bbl
  • Gold: -1.4% to $4038.30/ozt
  • Copper: -0.8% to $6.16/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1425
  • GBP/USD: +0.5% to 1.3258
  • USD/CNH: UNCH at 6.7985
  • USD/JPY: +0.1% to 161.96
• The Day Ahead:
  • 9:00 ET: 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%)
  • 9:45 ET: June Chicago PMI (Briefing.com consensus 60.0; prior 62.7)
  • 10:00 ET: June Consumer Confidence (Briefing.com consensus 94.2; prior 93.1)