Bond Market Update

Front End Leads Friday Slide

• U.S. Treasuries finished a bumpy week on a lower note with yields on 5s and shorter tenors settling just below this year's highs. The Friday session was not influenced by any economic data and the overall news flow was also on the light side, but it did not stop shorter tenors from spending the session in a steady slide while longer tenors retreated with a bit more reluctance. The selling, which took place despite a dip in the price of oil, left the 2-yr yield just two basis points below its highest settlement level of the year while yields on 10s and 30s are still more than ten basis points below their respective 2026 highs. Next week will bring a heavy dose of data, headlined by Tuesday's release of June CPI (Briefing.com consensus -0.1%; prior 0.5%) and Core CPI (Briefing.com consensus 0.2%; prior 0.2%). Crude oil retreated today but still gained nearly $3/bbl for the week, while the U.S. Dollar Index rose 0.1% to 100.96, ending the week with a slight gain.
• Yield Check:
  • 2-yr: +5 bps to 4.21% (+7 bps this week)
  • 3-yr: +4 bps to 4.24% (+7 bps this week)
  • 5-yr: +4 bps to 4.31% (+8 bps this week)
  • 10-yr: +3 bps to 4.57% (+8 bps this week)
  • 30-yr: +2 bps to 5.07% (+8 bps this week)

• 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: -1.0% to $71.41/bbl
  • Gold: -0.7% to $4114.40/ozt
  • Copper: +0.3% to $6.28/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1415
  • GBP/USD: UNCH at 1.3396
  • USD/CNH: -0.2% to 6.7812
  • USD/JPY: -0.4% to 161.70
• The Week Ahead:
  • Monday: June Treasury Budget (prior -$292.6 bln) at 14:00 ET
  • Tuesday: June NFIB Small Business Optimism Index (Briefing.com consensus 95.6; prior 95.3) at 6:00 ET; June CPI (Briefing.com consensus -0.1%; prior 0.5%) and Core CPI (Briefing.com consensus 0.2%; prior 0.2%) at 8:30 ET; and May Net Long-Term TIC Flows (prior $103.1 bln) at 16:00 ET
  • Wednesday: Weekly MBA Mortgage Index (prior -2.2%) at 7:00 ET; June PPI (Briefing.com consensus 0.1%; prior 1.1%), June Core PPI (Briefing.com consensus 0.4%; prior 0.4%), and July Empire State Manufacturing survey (Briefing.com consensus 8.5; prior 5.7) at 8:30 ET; weekly crude oil inventories (prior +3.00 mln) at 10:30 ET; and July Fed Beige Book at 14:00 ET
  • Thursday: July Philadelphia Fed survey (Briefing.com consensus 11.0; prior 10.3), weekly Initial Claims (Briefing.com consensus 219,000; prior 215,000), and Continuing Claims (prior 1.814 mln) at 8:30 ET; May Business Inventories (Briefing.com consensus 0.3%; prior 0.5%), July NAHB Housing Market Index (Briefing.com consensus 37; prior 35), and June Pending Home Sales (Briefing.com consensus 0.4%; prior 3.8%) at 10:00 ET; and weekly natural gas inventories (prior +61 bcf) at 10:30 ET
  • Friday: June Housing Starts (Briefing.com consensus 1.328 mln; prior 1.177 mln), Building Permits (Briefing.com consensus 1.403 mln; prior 1.413 mln), June Import Prices (prior 1.9%), Import Prices ex-oil (prior 0.8%), Export Prices (prior 1.3%), and Export Prices ex-agriculture (prior 1.2%) at 8:30 ET; June Industrial Production (Briefing.com consensus 0.3%; prior 0.1%) and Capacity Utilization (Briefing.com consensus 76.2%; prior 76.2%) at 9:15 ET; and preliminary July University of Michigan Consumer Sentiment (Briefing.com consensus 50.7; prior 49.5) at 10:00 ET