Bond Market Update

Steady Ahead of CPI

• U.S. Treasuries are on track for a flat start after two days of selling across the curve. Treasury futures spent the night in a sideways range with a slight downward bias, though they have stayed above their overnight lows. Treasury futures have done a bit better than other sovereign debt, save for JGBs. Japanese debt outperformed after Japan's Finance Minister Katayama said that JGBs should be included in Nippon Individual Savings Accounts. The U.S. session will feature the 8:30 ET release of June CPI (Briefing.com consensus -0.1%; prior 0.5%) and Core CPI (Briefing.com consensus 0.2%; prior 0.2%), followed by Fed Chairman Warsh's appearance before the House Financial Services Committee. Money center banks have started reporting their Q2 results with Bank of America (BAC), Goldman Sachs (GS), JPMorgan Chase (JPM), and Wells Fargo (WFC) beating their respective expectations. Crude oil has risen past $80/bbl while the U.S. Dollar Index is down 0.1% at 101.15.
• Yield Check:
  • 2-yr: UNCH at 4.26%
  • 3-yr: UNCH at 4.30%
  • 5-yr: UNCH at 4.36%
  • 10-yr: UNCH at 4.61%
  • 30-yr: UNCH at 5.10%

• News:
  • There was growing speculation that Meta (META) will issue bonds to fund data center construction.
  • Bank of England Governor Bailey told the U.K. Treasury that risks to financial stability have increased.
  • Germany's Economy Ministry observed some stabilization in the German economy at the mid-year point.
  • Hapag-Lloyd raised its guidance for the year due to strong demand and high freight rates.
  • China's June trade surplus reached $125.62 bln (expected surplus of $119.50 bln; last surplus of $105.43 bln) as imports grew 36.0% yr/yr (expected 24.0%; last 27.4%) and exports jumped 27.0% yr/yr (expected 18.2%; last 19.4%).
  • Japan's May Industrial Production was up 0.1% m/m (expected 0.5%; last 0.5%) and Capacity Utilization was up 0.1% m/m (last -0.8%).
  • Australia's July Westpac Consumer Sentiment was up 4.1% (last -2.9%). June NAB Business Confidence rose to -5 from -14 and NAB Business Survey remained at 3.
  • New Zealand's Q2 NZIER Business Confidence rose to 8% from -4%.
  • India's June WPI Inflation was up 9.87% yr/yr (expected 9.15%; last 9.68%).
  • Germany's June WPI was down 0.7% m/m (expected 0.5%; last -0.6%) but up 4.9% yr/yr (last 5.9%).
  • Swiss June PPI was down 0.3% m/m (expected -0.5%; last -0.4%), falling 2.1% yr/yr (last -1.8%).
• Commodities:
  • WTI Crude: +2.2% to $79.89/bbl
  • Gold: +0.7% to $4034.00/ozt
  • Copper: +1.5% to $6.373/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1407
  • GBP/USD: +0.3% to 1.3384
  • USD/CNH: -0.1% to 6.7806
  • USD/JPY: -0.2% to 162.20
• Data out Today:
  • 6:00 ET: June NFIB Small Business Optimism Index (actual 97.4; Briefing.com consensus 95.6; prior 95.3) 
  • 8:30 ET: June CPI (Briefing.com consensus -0.1%; prior 0.5%) and Core CPI (Briefing.com consensus 0.2%; prior 0.2%)
  • 16:00 ET: May Net Long-Term TIC Flows (prior $103.1 bln)