Bond Market Update

Inching Lower

• U.S. Treasuries are on track to begin the cash session a touch below yesterday's closing levels after a quiet night in the futures market. Treasury futures dipped in early evening action, but the slim losses were mostly recovered as the night went on, leaving the market little changed heading into the open. Unlike Treasuries, JGBs climbed strongly after Japan's Finance Minister Katayama indicated that pension funds will be encouraged to increase their exposure to domestic assets like JGBs. Economic data released overnight included a hot PPI report from Japan and final June CPI readings from Germany and France, which were close to expectations. The U.S. session, however, will be free of economic data today. Crude oil hovers just above $72/bbl while the U.S. Dollar Index is down 0.1% at 100.85.
• Yield Check:
  • 2-yr: +2 bps to 4.18%
  • 3-yr: +1 bp to 4.21%
  • 5-yr: +1 bp to 4.28%
  • 10-yr: +1 bp to 4.55%
  • 30-yr: +1 bp to 5.06%

• News:
  • The Japanese government is expected to release the framework for its economic plan on July 21.
  • Malaysia's central bank left its policy rate at 2.75%, as expected.
  • Expectations for a September rate hike from the European Central Bank are on the rise due to the failed U.S.-Iran ceasefire.
  • Bank of England Chief Economist Pill said that the bank rate will need to be raised this year.
  • Japan's June PPI was up 0.4% m/m (expected 0.3%; last 1.1%), rising 7.1% yr/yr (expected 6.8%; last 6.6%).
  • Germany's June CPI was down 0.3% m/m, as expected (last -0.2%) but up 2.3% yr/yr, as expected (last 2.6%).
  • France's June CPI was down 0.3% m/m (expected -0.2%; last 0.1%) but up 1.8% yr/yr, as expected (last 2.4%).
  • Italy's May Industrial Production was down 0.3% m/m (expected -0.1%; last 0.4%) but up 1.1% yr/yr (expected 1.3%; last 1.1%).
  • Swiss June SECO Consumer Climate rose to -36 from -38 (expected -35).
• Commodities:
  • WTI Crude: +0.6% to $72.54/bbl
  • Gold: -0.6% to $4116.30/ozt
  • Copper: UNCH at $6.268/lb
• Currencies:
  • EUR/USD: UNCH at 1.1431
  • GBP/USD: +0.2% to 1.3426
  • USD/CNH: -0.2% to 6.7791
  • USD/JPY: -0.3% to 161.85
• No Data on Today's Schedule