Bond Market Update

Long End Lags

• U.S. Treasuries are on track for slightly lower start in longer tenors while the front end is set to begin the day little changed after a night that saw some pressure on sovereign debt. Meanwhile, movement in global stocks was somewhat subdued, but there was still a solid rally in South Korea's Kospi (+2.4%) to end the week. The overnight data flow was moderate, including mixed social financing figures from China and an in-line reading of the eurozone's flash Q2 GDP (0.4% qtr/qtr). In the U.S., investors will receive the Retail Sales (Briefing.com consensus 0.2%; prior 0.2%) and Retail Sales ex-auto (Briefing.com consensus 0.2%; prior -0.2%) report for July at 8:30 ET. Crude oil hovers just below $82/bbl while the U.S. Dollar Index is down 0.3% at 99.66.
• Yield Check:
  • 2-yr: -1 bp to 4.13%
  • 3-yr: -1 bp to 4.20%
  • 5-yr: UNCH at 4.31%
  • 10-yr: +1 bp to 4.65%
  • 30-yr: +2 bps to 5.23%

• News:
  • A former Japanese currency diplomat Furusawa said that the Bank of Japan plans another 50-75 basis points of rate hikes, adding that another U.S. intervention is possible if the yen returns to this year's low against the dollar.
  • Fitch expects to see modest growth in China's insurances sector for the remainder of the year amid some regulatory support.
  • Australia's Prime Minister Albanese said that he appealed to President Trump to exempt Australia from additional tariffs.
  • In the U.K., Reform leader Farage won a by election in Clacton, which was expected.
  • Russia's Foreign Minister Lavrov said that an immediate ceasefire in Ukraine is not realistic.
  • China's July New Loans were down CNY340.0 bln (expected -CNY50.0 bln; last CNY1.61 trln), July Total Social Financing reached CNY1.41 trln (expected CNY1.20 trln; last CNY3.36 trln).
  • Hong Kong's Q2 GDP contracted 0.6% qtr/qtr, as expected (last -0.6%) but was up 4.3% yr/yr, as expected (last 4.3%).
  • Australia's Q2 Home Loans were down 1.9% qtr/qtr (last -3.5%).
  • New Zealand's July Business PMI hit 54.3 (last 60.1).
  • India's July WPI Inflation was up 9.78% yr/yr (expected 9.95%; last 9.87%).
  • Eurozone's flash Q2 GDP expanded 0.4% qtr/qtr, as expected (last 0.0%), growing 1.0% yr/yr, as expected (last 0.5%). Q2 Employment increased by 0.1% qtr/qtr, as expected (last 0.1%), rising 0.5% yr/yr (expected 0.6%; last 0.5%). June trade surplus reached EUR8.6 bln (expected deficit of EUR2.2 bln; last deficit of EUR9.0 bln).
  • Germany's July WPI was up 0.2% m/m (expected -0.2%; last -0.7%), rising 5.3% yr/yr (last 4.9%).
  • France's July CPI was up 0.6% m/m, as expected (last -0.3%), rising 2.1% yr/yr, as expected (last 1.8%).
  • Swiss Q2 GDP expanded 1.5% qtr/qtr (last 0.7%).
• Commodities:
  • WTI Crude: +0.4% to $81.58/bbl
  • Gold: UNCH at $4418.80/ozt
  • Copper: -0.3% to $6.587/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1567
  • GBP/USD: +0.4% to 1.3537
  • USD/CNH: UNCH at 6.7414
  • USD/JPY: -0.2% to 159.11
• Data out Today:
  • 8:30 ET: July Retail Sales (Briefing.com consensus 0.2%; prior 0.2%) and Retail Sales ex-auto (Briefing.com consensus 0.2%; prior -0.2%)
  • 10:00 ET: June Business Inventories (Briefing.com consensus 0.1%; prior 0.3%) and preliminary August University of Michigan Consumer Sentiment (Briefing.com consensus 54.5; prior 55.2)