Bond Market Update

 Padding Monday Gains

• U.S. Treasuries are on track for a modestly higher start, looking to continue yesterday's bounce from July selling. Treasury futures began slipping in evening action, extending their losses after the focus shifted to European trade, followed by a recent rally off lows amid reports that another U.S.-Iran deal is taking shape. Otherwise, the overnight flow of news and data was on the light side, featuring some speculation that Japan's Ministry of Finance intervened in the foreign exchange market once again on Monday. The U.S. session will see the release of June Trade Balance (Briefing.com consensus -$73.0 bln; prior -$77.6 bln) at 8:30 ET, followed by June Factory Orders (Briefing.com consensus 0.2%; prior -1.3%) and June job openings (prior 7.594 mln) at 10:00 ET, but these reports don't usually produce shockwaves in the market. Crude oil briefly climbed above its 50-day moving average (81.68) before giving back its gain while the U.S. Dollar Index is flat at 99.89.
• Yield Check:
  • 2-yr: -2 bps to 4.23%
  • 3-yr: -2 bps to 4.29%
  • 5-yr: -3 bps to 4.37%
  • 10-yr: -3 bps to 4.66%
  • 30-yr: -1 bp to 5.22%

• News:
  • Westpac abandoned its forecast for two more rate hikes from the Reserve Bank of Australia due to softening inflation.
  • China Securities Times expects the domestic property market to continue recovering during the second half of 2026.
  • Japan's July Monetary Base was down 13.8% yr/yr (expected -13.0%; last -13.7%).
  • South Korea's July CPI was down 0.2% m/m (expected 0.1%; last 0.1%) but up 2.8% yr/yr (expected 3.0%; last 3.2%).
  • Hong Kong's June Retail Sales rose 4.6% yr/yr (last 7.9%).
  • Australia's July Commodity Prices fell 15.4% yr/yr (last 14.6%).
  • France's June government budget deficit reached EUR106.8 bln (last deficit of EUR93.3 bln).
  • Italy's June Retail Sales were down 0.1% m/m (expected 0.3%; last 0.2%) but up 3.1% yr/yr (last 2.2%).
• Commodities:
  • WTI Crude: -1.0% to $79.57/bbl
  • Gold: +0.7% to $4118.60/ozt
  • Copper: +1.8% to $6.657/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1517
  • GBP/USD: +0.2% to 1.3445
  • USD/CNH: -0.1% to 6.7511
  • USD/JPY: +0.3% to 157.63
• Data out Today:
  • 8:30 ET: June Trade Balance (Briefing.com consensus -$73.0 bln; prior -$77.6 bln)
  • 10:00 ET: June Factory Orders (Briefing.com consensus 0.2%; prior -1.3%) and June job openings (prior 7.594 mln)