Bond Market Update

Rough Start

• U.S. Treasuries had a rough start to the week, pinched at first by rising oil prices and then languishing on the back of ongoing secular issues that include stubbornly high inflation and increased debt issuance to cover a large budget deficit. Notably, Treasuries didn't recover much ground after oil prices scaled lower amid reports that the U.S. and Iran might be making progress toward a deal. WTI crude futures traded just shy of $96.50/bbl at their early-morning peak before settling the day up just 0.3% to $92.44/bbl. Once again, losses were spread fairly evenly across the curve, with maturities from the 3-yr note to the 30-yr bond all sporting a 5-handle at today's settlement. There was no U.S. economic data of note today.
• Yield Check:
  • 2-yr: +8 bps to 4.93%
  • 3-yr: +8 bps to 5.01%
  • 5-yr: +8 bps to 5.07%
  • 10-yr: +9 bps to 5.25%
  • 30-yr: +8 bps to 5.57%

• News:
  • President Trump rejected Iran's ceasefire proposal and told aides he expects to resume bombing after the midterms. U.S. officials say talks are continuing between the two sides. WSJ
  • President Trump says the U.S. and Iran are expected to continue talks this week but remain far apart. Axios
  • Middle East publication Alhadath reporting "Iran has agreed to halt uranium enrichment in exchange for the easing of US sanctions"
  • Iranian officials pessimistic about deal to end war and open Strait of Hormuz before the midterms, according to Bloomberg
  • President Trump open to Iran sanctions relief for nuclear deal progress, according to CNN
  • White House advances a fair and reciprocal relationship with China; both countries cut tariffs on $30 bln of goods; established the U.S.-China Super Intelligence dialogue to exchange views
  • Fed Governor Lisa D. Cook (FOMC voter) 
  • The Trump administration's plan to reduce U.S. reliance on China for critical minerals is starting to work, according to WSJ
  • President Trump tells reporters he is looking "very seriously" at a diesel export ban. Bloomberg
  • President Trump to make an announcement at 2pm ET from the Oval Office, per White House schedule
  • President Trump reverses Biden-era fuel economy standards. Truth Social
  • Saudi Arabia restarts oil exports using East-West oil pipeline, according to Bloomberg
• Commodities:
  • WTI crude: +0.3% to $92.44/bbl
  • Gold: -3.4% to $4,171.70/ozt
  • Copper: -1.8% to $6.65/lb
• Currencies:
  • EUR/USD: -0.21% to 1.1367
  • GBP/USD: +0.1% to 1.3259
  • USD/CNH: -0.1% to 6.7126
  • USD/JPY: +0.1% to 157.40
• The Day Ahead:
  • 09:00 ET: July FHFA Housing Price Index (prior 0.0%)
  • 09:00 ET: July S&P Case-Shiller Home Price Index (prior 2.1%)
  • 10:00 ET: September Consumer Confidence (Briefing.com consensus: 90.0; prior 89.4)
  • 10:00 ET: August JOLTS - Job Openings (Briefing.com consensus: 7.150M; prior 7.271M)
  • 11:00 ET: Fed Governor Bowman (FOMC voter) opening remarks at community bank cyber workshop
  • 12:40 ET: Fed Governor Barr (FOMC voter) speech on economic outlook
  • 3:00 p.m. ET: Fed Governor Waller (FOMC voter) speech on payments