Bond Market Update

 Inching Higher

• U.S. Treasuries are on track for a modestly higher start, but early action is likely to see some volatility in response to the 8:30 ET release of the Employment Situation report for July, which is expected to show the addition of 86,000 nonfarm payrolls. Treasury futures spent the first half of the night in a sideways range, followed by some buying once the focus turned to action in Europe. Other sovereign debt was mixed, but little changed, while global equity markets have also been mixed. In news, President Trump said that he will not be criticizing Fed Chairman Warsh when asked about speculation regarding a potential rate hike in September. Crude oil hovers below $77/bbl while the U.S. Dollar Index is flat at 99.91.
• Yield Check:
  • 2-yr: -2 bps to 4.23%
  • 3-yr: -2 bps to 4.28%
  • 5-yr: -2 bps to 4.37%
  • 10-yr: -1 bp to 4.66%
  • 30-yr: UNCH at 5.21%

• News:
  • President Trump implemented a 15% tariff on polysilicon products from China and announced a price floor.
  • Chinese AI models from Alibaba and Moonshot are becoming more expensive.
  • FT reported that the European Central Bank was not aware of the Fed's participation in the yen intervention last week.
  • China's July trade surplus reached $112.50 bln (expected surplus of $108.60 bln; last surplus of $125.62 bln) as imports grew 27.5% yr/yr (expected 27.9%; last 36.0%) and exports rose 23.9% yr/yr (expected 22.2%; last 27.0%).
  • Japan's June Household Spending fell 6.4% m/m (expected -3.1%; last 3.7%), dropping 3.3% yr/yr (expected 0.8%; last -0.4%). June Leading Index remained at 116.4 (expected 116.5) and Coincident Indicator was up 0.3% m/m (expected 0.4%; last -0.2%).
  • Germany's June trade surplus reached EUR15.4 bln (expected surplus of EUR17.2 bln; last surplus of EUR19.4 bln) as imports grew 4.4% m/m (expected 1.0%; last -2.6%) and exports rose 0.9% m/m (expected 0.2%; last 1.1%). June Industrial Production was up 0.2% m/m (expected 0.2%; last 0.7%) and was unchanged yr/yr (last -0.1%).
  • France's Q2 Unemployment Rate rose to 8.3% from 8.1% (expected 8.2%). June trade deficit reached EUR5.8 bln (expected deficit of EUR6.5 bln; last deficit of EUR7.7 bln) and June Current Account deficit reached EUR1.40 bln (last deficit of EUR1.20 bln).
  • Swiss Q3 SECO Consumer Climate rose to -33 from -40 (expected -34).
• Commodities:
  • WTI Crude: -0.8% to $76.66/bbl
  • Gold: +1.9% to $4382.10/ozt
  • Copper: -1.0% to $6.64/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1532
  • GBP/USD: UNCH at 1.3448
  • USD/CNH: UNCH at 6.7468
  • USD/JPY: -0.1% to 158.33
• Data out Today:
  • 8:30 ET: July Nonfarm Payrolls (Briefing.com consensus 86,000; prior 57,000), Nonfarm Private Payrolls (Briefing.com consensus 69,000; prior 49,000), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.2%), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)
  • 15:00 ET: June Consumer Credit (Briefing.com consensus $9.0 bln; prior -$0.2 bln)