Bond Market Update

Looking to Bounce

• U.S. Treasuries are on track for a modestly higher start, looking to narrow some of this week's sharp losses that sent yields on 10s and shorter tenors to fresh highs for the year. Treasury futures dipped toward yesterday's intraday lows in early evening trade, but they found support around that area, rising steadily into the European session. The night brought a big batch of data, including flash July PMI readings that showed ongoing expansion in manufacturing and services sectors in Asia, and an improvement in readings across Europe. In other news, President Trump is planning to impose tariffs on 60 trading partners, including the EU. These tariffs will replace the 10% global tariff that is scheduled to expire due to a court ruling. This week was very quiet on the economic data front, but the market will receive a handful of reports today, starting with flash July S&P Global U.S. Manufacturing PMI (prior 52.5) and flash July S&P Global U.S. Services PMI (prior 48.8) at 9:45 ET, followed by June New Home Sales (Briefing.com consensus 620,000; prior 580,000) at 10:00 ET. Crude oil is falling from a six-week high while the U.S. Dollar Index is little changed at 101.41.
• Yield Check:
  • 2-yr: -2 bps to 4.34%
  • 3-yr: -2 bps to 4.37%
  • 5-yr: -2 bps to 4.44%
  • 10-yr: -2 bps to 4.68%
  • 30-yr: -1 bp to 5.16%

• News:
  • The U.S. Treasury's latest report on Macroeconomic and Foreign Exchange Policies did not label any trading partners as currency manipulators.
  • South Korea's regulators announced that increased cash requirements for leveraged ETF purchases will come into effect sooner than originally planned.
  • South Korea's President Lee will be meeting with big tech CEOs in San Francisco today.
  • Japan is setting up a panel to manage the flow of foreign nationals into the country, fulfilling Prime Minister Takaichi's campaign pledge.
  • European Central Bank policymaker Kocher said that second-round effects of inflation have not become apparent, but he is ready to vote for a September hike if needed.
  • The ECB's latest Survey of Professional Forecasters showed no change in inflation expectations for 2026 and a ten-basis point uptick for 2027. GDP growth in 2026 is expected at 0.6%, down from the previous forecast for a 1.0% increase while the outlook for 2027 was trimmed to 1.2% from 1.3%.
  • Japan's June National CPI was up 0.3% m/m (last 0.4%), rising 1.7% yr/yr (last 1.5%). June National Core CPI was up 1.6% yr/yr, as expected (last 1.4%). Flash July Manufacturing PMI hit 54.7 (expected 55.0; last 54.8) and flash Services PMI hit 51.9 (last 52.2).
  • Australia's flash July Manufacturing PMI hit 51.7 (last 51.5) and flash Services PMI hit 53.0 (last 50.5).
  • Singapore's Q1 URA Property Index was up 0.5% qtr/qtr, as expected (last 0.9%).
  • India's flash July Manufacturing PMI hit 53.9 (last 54.2) and flash Services PMI hit 53.1 (last 57.4).
  • Eurozone's flash July Manufacturing PMI hit 52.0 (expected 51.5; last 51.4) and flash Services PMI hit 51.6 (expected 49.8; last 49.4).
  • Germany's August GfK Consumer Climate fell to -29.6 from -29.3 (expected -28.7). Flash July Manufacturing PMI hit 52.2 (expected 50.4; last 50.3) and flash Services PMI hit 49.6 (expected 49.0; last 48.6).
  • U.K.'s July GfK Consumer Confidence rose to -17 from -23 (expected -22). June Retail Sales were up 1.0% m/m (expected -0.3%; last 1.2%), rising 4.2% yr/yr (expected 2.3%; last 3.5%). June Core Retail Sales were up 1.1% m/m (expected -0.4%; last 1.2%), rising 5.4% yr/yr (expected 3.2%; last 4.9%). Flash July Manufacturing PMI hit 52.8 (expected 52.0; last 52.5) and flash Services PMI hit 51.8 (expected 49.4; last 48.8).
  • France's flash July Manufacturing PMI hit 50.0 (expected 51.0; last 51.2) and flash Services PMI hit 49.8 (expected 47.5; last 46.8).
• Commodities:
  • WTI Crude: -2.4% to $90.02/bbl
  • Gold: +0.2% to $4056.60/ozt
  • Copper: +0.1% to $6.347/lb
• Currencies:
  • EUR/USD: UNCH at 1.1738
  • GBP/USD: +0.1% to 1.3324
  • USD/CNH: -0.1% to 6.7725
  • USD/JPY: UNCH at 163.80
• Data out Today:
  • 9:45 ET: Flash July S&P Global U.S. Manufacturing PMI (prior 52.5) and flash July S&P Global U.S. Services PMI (prior 48.8) 
  • 10:00 ET: June New Home Sales (Briefing.com consensus 620,000; prior 580,000)