Bond Market Update

Short End Ahead

• U.S. Treasuries are on track for a higher start that should reverse a good chunk of last week's loss in the 2-yr note. Treasury futures spent the overnight session in a steady ascent with the front end leading the way while the long end is a bit behind with the 30-yr bond up slightly. The overnight advance in Treasury futures has coincided with modest gains in most other sovereign debt while Japanese debt faced some pressure ahead of tomorrow's 30-yr JGB auction. Investors received a few economic reports since Friday afternoon with most coming in ahead of expectations. Economic data during the U.S. session will be limited to the 9:45 ET release of the final S&P Global U.S. Services PMI (prior 51.3) for June, followed by the June ISM Non-Manufacturing Index (Briefing.com consensus 54.2%; prior 54.5%) at 10:00 ET. Crude oil hovers below $69/bbl while the U.S. Dollar Index is up 0.2% at 101.09.
• Yield Check:
  • 2-yr: -3 bps to 4.11%
  • 3-yr: -4 bps to 4.13%
  • 5-yr: -3 bps to 4.20%
  • 10-yr: -3 bps to 4.46%
  • 30-yr: -1 bp to 4.98%

• News:
  • South Korea launched 24-hour currency trading and South Korea's President Lee said that a committee to enhance chip competitiveness will begin operating in August.
  • China has begun cracking down on safety violations in mining and chemical production.
  • European Central Bank policymaker Moulin said that he is comfortable with the base scenario and that the balance of risks is in the right place.
  • Germany increased its borrowing estimate for 2027 by about EUR7 bln due to weak tax revenue.
  • Hong Kong's June Manufacturing PMI hit 52.0 (last 50.4).
  • Australia's June MI Inflation Gauge was down 0.4% m/m (last -0.3%). June ANZ Commodity Price Index was down 1.0% m/m (last 0.7%) and June ANZ Job Advertisements decreased 0.2% m/m (last 2.0%).
  • Singapore's May Retail Sales were down 2.3% m/m (last 0.4%) but up 3.0% yr/yr (last 5.4%).
  • Eurozone's May Retail Sales were up 0.2% m/m, as expected (last -0.3%), rising 1.6% yr/yr (expected 1.5%; last 0.9%). May PPI was up 0.2% m/m, as expected (last 0.7%), rising 5.9% yr/yr (expected 5.7%; last 5.0%). July Sentix Investor Confidence rose to -3.1 from -13.4 (expected -14.5; last -13.4).
  • Germany's May Factory Orders were up 1.9% m/m (expected 1.1%; last -3.2%).
  • U.K.'s June Construction PMI hit 38.4 (expected 40.1; last 38.2).
  • Swiss June Unemployment Rate rose to 3.1% from 3.0% (expected 3.0%).
• Commodities:
  • WTI Crude: -0.4% to $68.43/bbl
  • Gold: +1.0% to $4167.60/ozt
  • Copper: +1.1% to $6.238/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1413
  • GBP/USD: UNCH at 1.3342
  • USD/CNH: +0.3% to 6.7983
  • USD/JPY: +0.6% to 162.33
• Data out Today:
  • 9:45 ET: Final June S&P Global U.S. Services PMI (prior 51.3)
  • 10:00 ET: June ISM Non-Manufacturing Index (Briefing.com consensus 54.2%; prior 54.5%)