Bond Market Update

Short End Ahead

• U.S. Treasuries are on track for a modestly higher start in shorter tenors after last week's underperformance while the long bond is set for a slightly lower open after outperforming last week. Treasury futures started the week on a subdued note, seeing some early evening strength, followed by mild backtracking after the focus turned to action in Europe. Other sovereign debt has faced some pressure alongside a rise in the price of oil after weekend fighting between the U.S. and Iran. The overnight news flow was on the light side, but it is worth noting that G20 finance ministers and central bank governors are meeting in Asheville, NC today and tomorrow. Economic data released overnight showed another month of contractionary Manufacturing (49.8) and Non-Manufacturing (49.0) PMI readings from China while the U.S. session will be free of data. Crude oil has climbed above $86/bbl while the U.S. Dollar Index is down 0.2% at 99.54.
• Yield Check:
  • 2-yr: -2 bps to 4.33%
  • 3-yr: -2 bps to 4.38%
  • 5-yr: -1 bp to 4.47%
  • 10-yr: UNCH at 4.72%
  • 30-yr: +1 bp to 5.22%

• News:
  • The approval rating of Japan Prime Minister Takaichi's cabinet remained at 53%, according to the latest poll from Asahi.
  • India and Brazil are looking to increase their bilateral trade to $30 bln by 20230.
  • The Reserve Bank of New Zealand will release its latest policy Statement on Wednesday, which could call for a rate hike.
  • China's August Manufacturing PMI hit 49.8 (expected 49.5; last 49.2) and Non-Manufacturing PMI hit 49.0 (expected 49.5; last 49.0).
  • Japan's July Retail Sales rose 4.0% yr/yr (expected 3.2%; last 0.6%). July Housing Starts were up 8.2% yr/yr (expected 7.2%; last 18.6%) and Construction Orders fell 13.4% yr/yr (last 2.3%).
  • South Korea's July Retail Sales were down 2.4% m/m (last 2.7%) and July Service Sector Output was down 1.3% m/m (last 0.7%). July Industrial Production was up 0.2% m/m (last 6.7%), rising 3.6% yr/yr (last 6.0%).
  • Hong Kong's July Retail Sales rose 4.5% yr/yr (last 4.6%).
  • Australia's Q2 Company Gross Operating Profits rose 1.8% qtr/qtr (expected 2.0%: last -1.5%) and Pre-tax Profits were up 12.5% qtr/qtr (last -4.1%). July Private Sector Credit rose 0.6% m/m (expected 0.7%; last 0.8%) and Housing Credit was up 0.5% m/m (last 0.6%). August MI Inflation Gauge was up 0.5% m/m (last 1.0%).
  • New Zealand's August ANZ Business Confidence hit 53.7 (last 56.1).
  • India's Q1 GDP expanded 7.8% yr/yr (expected 7.1%; last 7.8%).
  • Spain's June Current Account surplus reached EUR2.41 bln (last surplus of EUR1.84 bln).
• Commodities:
  • WTI Crude: +3.9% to $86.63/bbl
  • Gold: -0.6% to $4505.00/ozt
  • Copper: +0.4% to $6.687/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1597
  • GBP/USD: UNCH at 1.3539
  • USD/CNH: -0.1% to 6.7207
  • USD/JPY: -0.2% to 159.68
• No Data on Today's Schedule