Bond Market Update

Higher Start Ahead

• U.S. Treasuries are on track to continue their rebound off 2026 lows after a night that saw a steady rise in equity futures. Treasury futures began climbing in early evening action, reaching their best levels of the night at the start of the European session, followed by a slight dip from highs. Other sovereign debt also saw some buying while South Korea's technology stocks faced renewed pressure that will carry into the start of the Wall Street session. The overall news flow was on the light side, though Citadel Securities now expects a surprise rate hike announcement from the FOMC tomorrow, which has made some headlines. There was no significant change in the U.S.-Iran conflict, though crude oil has continued its pullback toward $80/bbl, while the U.S. Dollar Index is up 0.1% at 101.59, nearing its June high (101.80). The U.S. Treasury will cap this week's condensed note auction slate ahead of tomorrow's FOMC Decision with a $44 bln 7-yr note sale at 13:00 ET.
• Yield Check:
  • 2-yr: -1 bp to 4.31%
  • 3-yr: -2 bps to 4.33%
  • 5-yr: -1 bp to 4.39%
  • 10-yr: -1 bp to 4.62%
  • 30-yr: -2 bps to 5.11%

• News:
  • Japan's Prime Minister Takaichi plans to lower the food tax to 1% from 8% and is likely to raise the minimum wage.
  • South Korean regulators are expected to announce deposit requirements for ETF purchases on Friday.
  • The Swiss National Bank is expected to keep its rate at zero until the end of next year.
  • Japan's May BoJ Core CPI was up 2.7% yr/yr (last 2.7%).
  • South Korea's July Consumer Confidence rose to 106.8 from 106.6.
  • France's July Consumer Confidence rose to 86 from 84 (expected 85).
  • Italy's non-EU trade surplus reached EUR2.55 bln (last surplus of EUR3.84 bln).
  • Spain's June Retail Sales were up 0.5% yr/yr (last 1.3%) and Q2 Unemployment Rate rose to 9.87% from 10.8% (expected 10.1%).
• Commodities:
  • WTI Crude: -0.9% to $81.90/bbl
  • Gold: -1.3% to $4026.00/ozt
  • Copper: -1.2% to $6.301/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1365
  • GBP/USD: UNCH at 1.3281
  • USD/CNH: +0.1% to 6.7728
  • USD/JPY: +0.1% to 163.93
• Data out Today:
  • 8:30 ET: June advance International Trade in Goods (prior -$105.8 bln), advance Retail Inventories (prior 0.6%), and advance Wholesale Inventories (prior 0.3%)
  • 9:00 ET: May FHFA Housing Price Index (Briefing.com consensus 0.0%; prior -0.1%) and May S&P Case-Shiller Home Price Index (Briefing.com consensus 1.3%; prior 1.1%)
  • 10:00 ET: July Consumer Confidence (Briefing.com consensus 92.1; prior 91.2)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results