Bond Market Update

 Higher Start Ahead

• U.S. Treasuries are on track for a higher start that should put yields back at their lowest levels of the week. Treasury futures began rising last evening, continuing their advance through the night while other sovereign debt edged higher while equity markets faced some ongoing volatility with Japan's Nikkei (-4.0%) diving to a five-week low. The overnight news flow included South Korean regulators banning the issuance of leveraged single-stock investment products and the start of a World Artificial Intelligence Conference in China, with the latter fueling concerns that China will export AI deflation to the rest of the world. The overnight data flow was on the light side, but things will pick up during the U.S. session with the market set to receive June Housing Starts (Briefing.com consensus 1.328 mln; prior 1.177 mln) and Building Permits (Briefing.com consensus 1.403 mln; prior 1.413 mln) at 8:30 ET, followed by June Industrial Production at 9:15 ET, and the preliminary July University of Michigan Consumer Sentiment (Briefing.com consensus 50.7; prior 49.5) at 10:00 ET. Crude oil is nearing $81/bbl while the U.S. Dollar Index is up 0.1% at 100.84.
• Yield Check:
  • 2-yr: -3 bps to 4.13%
  • 3-yr: -3 bps to 4.17%
  • 5-yr: -4 bps to 4.24%
  • 10-yr: -5 bps to 4.52%
  • 30-yr: -5 bps to 5.05%

• News:
  • President Trump said last evening that China interfered with the 2020 election.
  • Korea Financial Services Commission banned the issuance of single-stock leveraged products.
  • Andy Burnham takes leadership of the British Labour party today and is set to become prime minister on Monday. The IMF has reportedly warned Mr. Burnham that there is little room for increasing public spending.
  • Germany's Commerzbank is reportedly preparing its demands ahead of likely merger talks with UniCredit.
  • Hong Kong's June Unemployment Rate remained at 3.7%.
  • New Zealand's June FPI was up 0.6% m/m (last 1.0%).
  • Singapore's June trade surplus reached SGD13.817 bln (last surplus of SGD5.556 bln) as non-oil exports fell 8.9% (last 7.7%), rising 20.7% yr/yr (expected 30.2%; last 38.4%).
  • Eurozone's June CPI was down 0.1% m/m, as expected (last 0.1%) but up 2.8% yr/yr, as expected (last 3.2%). June Core CPI was up 0.2% m/m, as expected (last 0.2%), rising 2.4% yr/yr, as expected (last 2.6%). May Current Account surplus reached EUR25.1 bln (expected surplus of EUR18.1 bln; last surplus of EUR15.7 bln).
• Commodities:
  • WTI Crude: +2.2% to $80.68/bbl
  • Gold: +0.1% to $3995.70/ozt
  • Copper: -2.0% to $6.213/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1432
  • GBP/USD: -0.2% to 1.3440
  • USD/CNH: +0.1% to 6.7791
  • USD/JPY: UNCH at 162.34
• Data out Today:
  • 8:30 ET: 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%)
  • 9:15 ET: June Industrial Production (Briefing.com consensus 0.3%; prior 0.1%) and Capacity Utilization (Briefing.com consensus 76.2%; prior 76.2%)
  • 10:00 ET: Preliminary July University of Michigan Consumer Sentiment (Briefing.com consensus 50.7; prior 49.5)