Bond Market Update

 Quiet Start Ahead

• U.S. Treasuries are on track for a slightly higher start after a quiet night in the futures market. Treasury futures made a couple rally attempts during the overnight session, but both moves found resistance, returning futures toward yesterday's lows. Overnight action saw heavy focus on NVIDIA's (NVDA) stellar earnings report, which showed revenue growth of more than 100% coupled with strong guidance for Q3. Elsewhere, the Bank of Korea announced a 25-basis point rate hike and hinted at a deceleration in the pace of future hikes. Economic data released overnight did not include any surprises, while the data flow during the U.S. session will be limited to weekly jobless claims and three other reports that usually do not elicit a reaction from the market. The Jackson Hole Symposium will begin tonight, followed by Fed Chairman Warsh's keynote address tomorrow morning. Crude oil holds a slight gain while the U.S. Dollar Index is up 0.1% at 99.23.
• Yield Check:
  • 2-yr: UNCH at 4.22%
  • 3-yr: -1 bp to 4.28%
  • 5-yr: UNCH at 4.38%
  • 10-yr: UNCH at 4.66%
  • 30-yr: -1 bp to 5.18%

• News:
  • The Bank of Korea raised its policy rate by 25 basis points to 3.00%, as expected. A handful of policymakers expect two more hikes, but the pace of increases is likely to slow.
  • Bank of Japan Deputy Governor Himino called for timely rate hikes but did not explicitly state that he will vote in favor of an increase in September.
  • Fitch is scheduled to release a review of France's sovereign rating tomorrow.
  • China's July Industrial Profit was up 17.6% YTD (last 18.7%).
  • Australia's Q2 Building Capital Expenditure was up 2.1% qtr/qtr (last -3.3%), Q2 Private New Capital Expenditure fell 3.6% qtr/qtr (expected 0.8%; last 6.9%), and Q2 Plant/Machinery Capital Expenditure fell 8.9% qtr/qtr (last 18.4%).
  • Eurozone's July Private Sector Loans were up 3.1% yr/yr (expected 2.9%; last 3.0%) and July Loans to Nonfinancials rose 4.4% yr/yr (last 4.0%).
  • Germany's September GfK Consumer Climate rose to -26.6 from -29.4 (expected -29.5).
  • France's July PPI was up 1.1% m/m (last -0.4%), rising 3.4% yr/yr (last 2.8%). July jobseeker total increased to 3.143 mln from 3.122 mln.
  • Swiss Q2 Employment Level increased to 5.698 mln from 5.537 mln.
• Commodities:
  • WTI Crude: +0.3% to $82.47/bbl
  • Gold: -0.1% to $4650.30/ozt
  • Copper: -0.5% to $6.564/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1642
  • GBP/USD: -0.1% to 1.3579
  • USD/CNH: UNCH at 6.7198
  • USD/JPY: +0.1% to 159.43
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 210,000; prior 206,000), Continuing Claims (prior 1.799 mln), July advance International Trade in Goods (prior -$101.5 bln), July advance Retail Inventories (prior 0.0%), and advance Wholesale Inventories (prior 0.3%)
  • 10:30 ET: Weekly natural gas inventories (prior +16 bcf)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results