Bond Market Update

PCE On Tap

• U.S. Treasuries are on track for a mostly flat start with some slight weakness in the long end, though that could change quickly in reaction to this morning's batch of economic data. Treasury futures began dipping in early evening trade, continuing their slight retreat at a slow pace into the night. Pre-market lows were reached at the start of the European session, followed by a return to levels from last evening. Meanwhile, other sovereign debt has barely budged while global equity markets have also seen limited movement. The overnight news flow was on the light side, giving investors time to speculate about yesterday's surprise U.S. visit to Moscow. It has been reported that CIA Director Ratcliffe was aboard the military aircraft that landed in Russia yesterday morning and while Kremlin acknowledged that Mr. Ratcliffe met with Russian intelligence officials, there was no official statement about the reason for the visit. It is possible that Mr. Ratcliffe delivered a message about the economic pressure campaign on Iran, but the visit could have also been prompted by recent mobilization exercises in Kaliningrad, a Russian sliver of territory surrounded by Poland, Lithuania, and the Baltic Sea. Today's data slate will feature the Personal Income/Outlays report for July, which will include the Fed's preferred inflation gauge. Later in the day, the U.S. Treasury will sell $70 bln in 5-yr notes. Crude oil is falling toward its 50-day moving average (79.04) while the U.S. Dollar Index is up 0.1% at 99.01.
• Yield Check:
  • 2-yr: UNCH at 4.20%
  • 3-yr: UNCH at 4.26%
  • 5-yr: UNCH at 4.35%
  • 10-yr: UNCH at 4.64%
  • 30-yr: +1 bp to 5.18%

• News:
  • Bank of Japan Governor Ueda will not attend the Jackson Hole Economic Symposium. Policymaker Tamura, who is a known hawk, will represent the BoJ at the upcoming meeting.
  • Expectations for a September rate hike from the ECB are solidifying, but additional increases are not expected at this time. ECB policymaker Schnabel said that rates must rise with the extent of the increase determined by data.
  • Japan's July Corporate Services Price Index was up 3.6% yr/yr (expected 3.2%; last 3.4%).
  • Australia's July MI Leading Index was unchanged m/m (last 0.1%), July CPI was up 3.5% yr/yr (expected 3.3%; last 3.8%), and Q2 Construction Work Done fell 2.1% qtr/qtr (expected 0.5%; last 4.3%).
  • Singapore's July Industrial Production was up 2.3% m/m (expected 3.0%; last -7.0%), rising 6.8% yr/yr (expected 6.7%: last 7.5%).
  • U.K.'s August CBI Distributive Trades Survey fell to -48 from -26 (expected -35).
  • Swiss August ZEW Expectations rose to 12.1 from 10.0.
• Commodities:
  • WTI Crude: -2.4% to $80.38/bbl
  • Gold: -0.5% to $4673.00/ozt
  • Copper: -0.3% to $6.691/lb
• Currencies:
  • EUR/USD: UNCH at 1.1669
  • GBP/USD: -0.1% to 1.3630
  • USD/CNH: +0.1% to 6.7199
  • USD/JPY: -0.1% to 159.09
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.0%; prior -0.4%)
  • 8:30 ET: Q2 GDP -- second estimate (Briefing.com consensus 1.5%; prior 1.5%), Q2 GDP Deflator -- second estimate (Briefing.com consensus 6.3%; prior 6.3%), July Personal Income (Briefing.com consensus 0.2%; prior 0.2%), Personal Spending (Briefing.com consensus 0.2%; prior 0.3%), PCE Prices (Briefing.com consensus 0.1%; prior -0.1%), Core PCE Prices (Briefing.com consensus 0.2%; prior 0.1%), July Durable Orders (Briefing.com consensus 0.5%; prior 0.3%), and Durable Orders ex-transport (Briefing.com consensus 0.5%; prior 0.6%)
  • 10:30 ET: Weekly crude oil inventories (prior +4.41 mln)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results