Bond Market Update

 Lower Start Ahead

• U.S. Treasuries are on track for a modestly lower start after last week's retreat. Treasury futures started the week with losses that were partially recovered as the night went on. There was continued military activity between the U.S. and Iran and some reports of Iran trying to block the Strait of Hormuz, but the U.S. military has maintained that traffic continues flowing through the Strait. Crude oil has rallied back to its 50-day moving average (74.33) with last week's high looming about $2/bbl above. The overnight session was light on data, which will also be the case during the U.S. session leading into tomorrow's release of June CPI (Briefing.com consensus -0.1%; prior 0.5%). The U.S. Dollar Index is down 0.1% at 100.90.
• Yield Check:
  • 2-yr: +1 bp to 4.22%
  • 3-yr: +2 bps to 4.26%
  • 5-yr: +1 bp to 4.32%
  • 10-yr: +1 bp to 4.58%
  • 30-yr: +1 bp to 5.08%

• News:
  • Citigroup upgraded Japan to Overweight from Underweight.
  • China imposed temporary export restrictions on helium due to renewed fighting in the Middle East.
  • South Korea's exports were up 54% yr/yr through the first ten days of June with chip exports jumping nearly 200%.
  • The U.K.'s leadership race will take shape this week with Andy Burnham still seen as the clear favorite to become next prime minister. Reports suggest that he may combine a departmental spending review with an autumn budget.
  • India's June trade deficit reached $30.43 bln (last deficit of $28.21 bln). June CPI was up 4.38% yr/yr (expected 4.30%; last 3.93%).
  • New Zealand's June Performance of Services Index hit 50.6 (last 48.0).
• Commodities:
  • WTI Crude: +3.3% to $73.78/bbl
  • Gold: -1.0% to $4071.10/ozt
  • Copper: +0.5% to $6.312/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1428
  • GBP/USD: UNCH at 1.3395
  • USD/CNH: UNCH at 6.7798
  • USD/JPY: +0.3% to 162.11
• Data out Today:
  • 14:00 ET: June Treasury Budget (prior -$292.6 bln)