Bond Market Update

Inching Lower Again

• U.S. Treasuries are on track for a modestly lower start, looking to continue their pullback from June highs. Treasury futures spent the night in a narrow range with a slight downward bias while other sovereign debt underperformed. There was some renewed turbulence in equity sentiment as South Korea's Kospi (-7.9%) sank to a three-week low amid heavy selling in Samsung and SK Hynix. European markets have had a better showing, and there is still some potential for elevated volatility around the 8:30 ET release of the Employment Situation report for June (Briefing.com consensus 110,000; prior 172,000). However, volatility is likely to subside going into the early afternoon given today's early closure in the Treasury market and tomorrow's market-wide closure in observance of Independence Day. Crude oil has dipped below $68/bbl while the U.S. Dollar Index is down 0.3% at 101.07.
• Yield Check:
  • 2-yr: +1 bp to 4.17%
  • 3-yr: +1 bp to 4.19%
  • 5-yr: +2 bps to 4.25%
  • 10-yr: +1 bp to 4.49%
  • 30-yr: +1 bp to 4.98%

• News:
  • Japanese officials are reportedly considering a shift away from hinting at interventions before they take place.
  • Japan's Prime Minister Takaichi is visiting India, looking to form some reciprocal agreements on investment.
  • Japan's final tax revenue for the last fiscal year is expected to reach a six-year high.
  • Germany's Chancellor Merz said that a pension overhaul will be complete by the end of the year, adding that income tax cuts amounting to about EUR10 bln are in the cards.
  • Japan's June Monetary Base was down 13.7% yr/yr (expected -10.0%; last -12.2%).
  • South Korea's June CPI was up 0.1% m/m, as expected (last 0.5%), rising 3.2% yr/yr, as expected (last 3.1%).
  • Hong Kong's May Retail Sales rose 7.9% yr/yr (last 8.6%).
  • Australia's May trade deficit reached AUD3.018 bln (expected surplus of AUD2.190 bln; last surplus of AUD1.383 bln) as imports grew 2.6% m/m (last 0.2%) and exports fell 6.9% m/m (last 7.2%).
  • New Zealand's May Building Consents were down 4.0% m/m (last 11.1%).
  • Eurozone's May Unemployment Rate remained at 6.2% (expected 6.3%).
  • France's May government budget deficit reached EUR93.3 bln (last deficit of EUR69.6 bln).
  • Italy's May Unemployment Rate fell to 5.0% from 5.1% (expected 5.1%).
  • Spain's June Unemployment decreased by 28,700 (expected -40,800; last -36,300).
  • Swiss June CPI was unchanged m/m (expected 0.1%; last 0.2%), rising 0.5% yr/yr, as expected (last 0.6%)
• Commodities:
  • WTI Crude: -2.0% to $67.24/bbl
  • Gold: -0.1% to $4077.50/ozt
  • Copper: -0.6% to $6.143/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1405
  • GBP/USD: +0.3% to 1.3315
  • USD/CNH: UNCH at 6.7950
  • USD/JPY: -0.7% to 161.47
• Data out Today:
  • 8:30 ET: June Nonfarm Payrolls (Briefing.com consensus 110,000; prior 172,000), Nonfarm Private Payrolls (Briefing.com consensus 88,000; prior 120,000), Unemployment Rate (Briefing.com consensus 4.3%; prior 4.3%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), Average Workweek (Briefing.com consensus 34.3; prior 34.3), weekly Initial Claims (Briefing.com consensus 220,000; prior 215,000), and Continuing Claims (prior 1.821 mln)
  • 10:00 ET: May Factory Orders (Briefing.com consensus 1.5%; prior 4.8%)
  • 10:30 ET: Weekly natural gas inventories (prior +76 bcf)
  • 14:00 ET: Treasury market early close