Bond Market Update

Long End Leads Early Weakness

• U.S. Treasuries are on track for a lower start after yesterday's post-FOMC volatility saw weakness in longer tenors and outperformance up front. Treasury futures faced some additional pressure after the cash close, hitting lows later in the night with 30-yr bond futures touching a level not seen since late 2023, as a result, the 30-yr yield has reached its highest level in 19 years. The market received a big batch of end-of-month data overnight, headlined by the eurozone's flash Q2 GDP (0.4%; expected 0.2%), which was ahead of expectations thanks to above-consensus growth in Germany, Italy, and Spain. The U.S. session will also feature the release of the advance Q2 GDP (Briefing.com consensus 2.3%; prior 2.1%), which will be released alongside the Personal Income/Outlays report for June. Crude oil has slipped below $84/bbl while the U.S. Dollar Index is down 0.1% at 100.76.
• Yield Check:
  • 2-yr: +1 bp to 4.25%
  • 3-yr: +3 bps to 4.31%
  • 5-yr: +4 bps to 4.39%
  • 10-yr: +6 bps to 4.68%
  • 30-yr: +7 bps to 5.21%

• News:
  • Japan's July Household Confidence rose to 34.9 from 33.8 (expected 34.2; last 33.8).
  • Australia's June Building Approvals were up 7.2% m/m (expected -0.7%; last -1.6%), rising 8.9% yr/yr (last 5.5%). Q2 Import Price Index was up 5.7% qtr/qtr (expected 0.0%; last 0.1%) and Export Price Index was up 1.1% qtr/qtr (last 0.5%).
  • New Zealand's July ANZ Business Confidence rose to 56.1 from 36.6.
  • Eurozone's Q2 GDP expanded 0.4% qtr/qtr (expected 0.2%; last -0.2%), growing 1.0% yr/yr (expected 0.5%; last 0.3%). June Unemployment Rate remained at 6.3% (expected 6.2%). July Business and Consumer Survey rose to 96.9 from 95.4 (expected 96.0).
  • Germany's Q2 GDP expanded 0.2% qtr/qtr (expected 0.1%; last 0.3%), growing 0.9% yr/yr (expected 0.6%; last 0.4%).
  • France's Q2 GDP expanded 0.2% qtr/qtr, as expected (last -0.1%), growing 0.7% yr/yr (expected 0.8%; last 0.8%). June Consumer Spending was up 0.4% m/m (expected -0.1%; last 0.3%) and Q2 nonfarm payrolls decreased 0.1% qtr/qtr, as expected (last 0.0%).
  • Italy's Q2 GDP expanded 0.2% qtr/qtr (expected 0.1%; last 0.3%), growing 1.0% yr/yr (expected 0.7%; last 0.8%). June Unemployment Rate rose to 5.7% from 5.3% (expected 5.0%).
  • Spain's Q2 GDP expanded 0.7% qtr/qtr (expected 0.6%; last 0.6%), growing 2.7% yr/yr (expected 2.5%; last 2.7%). July CPI was up 0.2% m/m, as expected (last 0.6%), rising 3.0% yr/yr (last 2.9%).
  • Swiss July KOF Leading Indicators rose to 103.5 from 102.1 (expected 100.9).
• Commodities:
  • WTI Crude: -1.2% to $83.48/bbl
  • Gold: +1.0% to $4075.40/ozt
  • Copper: +2.2% to $6.45/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1471
  • GBP/USD: +0.2% to 1.3381
  • USD/CNH: -0.1% to 6.7528
  • USD/JPY: -0.3% to 162.89
• Data out Today:
  • 8:30 ET: Advance Q2 GDP (Briefing.com consensus 2.3%; prior 2.1%), advance Q2 GDP Deflator (Briefing.com consensus 3.7%; prior 3.6%), June Personal Income (Briefing.com consensus 0.3%; prior 0.7%), Personal Spending (Briefing.com consensus 0.4%; prior 0.7%), PCE Prices (Briefing.com consensus -0.1%; prior 0.4%), Core PCE Prices (Briefing.com consensus 0.2%; prior 0.3%), weekly Initial Claims (Briefing.com consensus 203,000; prior 187,000), and Continuing Claims (prior 1.796 mln)
  • 10:30 ET: Weekly natural gas inventories (prior +32 bcf)