Bond Market Update

 Bouncing Off Lows

• U.S. Treasuries are on track for a higher start after last week's selling sent yields on longer tenors to fresh highs for the year. The overnight session started strong, with Treasury futures adding to their gains as the night went on. The advance has been assisted by a sharp drop in the price of oil after President Trump called off another round of attacks on Iran, adding last evening that another deal might be taking shape. The improvement in sentiment was also visible in equity futures, though they have retreated from their overnight highs after another bumpy session in South Korea's Kospi (-5.1%). Today's economic data slate will be headlined by the 10:00 ET release the ISM Manufacturing Index for July (Briefing.com consensus 54.0%; prior 53.3%). Crude oil is falling back below its 50-day moving average (82.01) to a one-week low while the U.S. Dollar Index is down 0.1% at 99.80.
• Yield Check:
  • 2-yr: -6 bps to 4.23%
  • 3-yr: -7 bps to 4.29%
  • 5-yr: -8 bps to 4.38%
  • 10-yr: -8 bps to 4.67%
  • 30-yr: -6 bps to 5.22%

• News:
  • The U.S. Treasury confirmed that it took part in a joint intervention in the foreign exchange market with Japan's Ministry of Finance and Treasury Secretary Bessent called for increasing the size of the facility that was used to conduct the operation.
  • Fed Chairman Warsh is considering the number of FOMC policy meetings per year.
  • Chinese press reported that convertible bond sales in China could exceed CNY100 bln this year.
  • China's July RatingDog Manufacturing PMI hit 50.9 (expected 51.9; last 51.7).
  • Japan's July Manufacturing PMI hit 54.5 (expected 54.7; last 54.8).
  • South Korea's July trade surplus reached $30.23 bln (expected surplus of $29.59 bln; last surplus of $36.09 bln) as imports grew 26.5% yr/yr (expected 26.6%; last 30.0%) and exports jumped 62.8% yr/yr (expected 59.0%; last 70.7%). July Manufacturing PMI hit 53.1 (last 52.1).
  • Australia's July Manufacturing PMI hit 52.0 (expected 51.7; last 51.5). July MI Inflation Gauge was up 1.0% m/m (last -0.4%) and July ANZ Job Advertisements rose 2.0% m/m (last -0.2%).
  • New Zealand's June Building Consents were down 3.6% m/m (last -4.9%).
  • India's July Manufacturing PMI hit 53.5 (expected 53.9; last 54.2).
  • Eurozone's July Manufacturing PMI hit 51.9 (expected 52.0; last 52.0).
  • Germany's June Retail Sales were down 1.1% m/m (expected -0.4%; last 1.2%), falling 0.2% yr/yr (last -2.8%). July Manufacturing PMI hit 52.2, as expected (last 52.2).
  • U.K.'s July Manufacturing PMI hit 51.9 (expected 52.8; last 52.8).
  • France's July Manufacturing PMI hit 49.8 (expected 50.0; last 50.0).
  • Italy's Manufacturing PMI hit 51.3 (expected 52.5; last 52.2).
  • Swiss July CPI was down 0.1% m/m, as expected (last 0.0%) but up 0.4% yr/yr (last 0.5%). July Manufacturing PMI hit 53.2 (expected 54.5; last 54.3).
• Commodities:
  • WTI Crude: -6.4% to $79.28/bbl
  • Gold: +0.2% to $4115.60/ozt
  • Copper: +0.7% to $6.509/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1533
  • GBP/USD: -0.1% to 1.3468
  • USD/CNH: UNCH at 6.7519
  • USD/JPY: -0.5% to 156.65
• Data out Today:
  • 9:45 ET: Final July S&P Global U.S. Manufacturing PMI (prior 53.8)
  • 10:00 ET: June Construction Spending (Briefing.com consensus 0.3%; prior 0.1%) and July ISM Manufacturing Index (Briefing.com consensus 54.0%; prior 53.3%)