Bond Market Update

Steady Ahead of Jobs Report

• U.S. Treasuries are on track for a slightly lower start in shorter tenors after yesterday's outperformance while the long end is set for a flat open. However, the standing could change quickly once the market receives the Employment Situation report for August (Briefing.com consensus 45,000; prior -23,000) at 8:30 ET. Like Treasuries, other sovereign debt is mostly little changed despite some noteworthy overnight news. In Japan, JGBs of all tenors extended their bounce off 2026 lows and Softbank priced a JPY1 trillion retail bond offering. Elsewhere, FT reported that Norway's sovereign wealth fund is looking to trim its overall asset allocation of U.S. Treasuries to 50% from 70%. Crude oil is giving back its gain from yesterday while the U.S. Dollar Index is up 0.2% at 99.07.
• Yield Check:
  • 2-yr: +2 bps to 4.35%
  • 3-yr: UNCH at 4.41%
  • 5-yr: UNCH at 4.51%
  • 10-yr: UNCH at 4.76%
  • 30-yr: UNCH at 5.24%

• News:
  • Japan's Finance Minister Katayama confirmed that the budget for fiscal 27/28 will reach a new record of JPY143 trillion.
  • The U.K. is looking to approve new oil drilling efforts in the North Sea.
  • Volkswagen's supervisory board approved a plan that calls for up to 50,000 additional job cuts.
  • Japan's July Household Spending was up 0.5% m/m (expected 2.6%; last -6.4%) but down 3.6% yr/yr (expected -1.6%; last -3.3%).
  • South Korea's July Current Account surplus reached $42.08 bln (last surplus of $49.73 bln).
  • Eurozone's July Retail Sales were down 0.6% m/m (expected 0.3%; last 0.2%) but up 0.6% yr/yr (expected 1.1%; last 1.4%).
  • Germany's July Factory Orders rose 2.5% m/m (expected 0.3%; last 3.7%).
  • Italy's July Retail Sales were down 0.4% m/m (expected 0.2%; last -0.2%) but up 0.8% yr/yr (last 3.1%).
• Commodities:
  • WTI Crude: -0.7% to $90.69/bbl
  • Gold: -0.6% to $4513.90/ozt
  • Copper: -0.2% to $6.654/lb
• Currencies:
  • EUR/USD: UNCH at 1.1621
  • GBP/USD: +0.1% to 1.3534
  • USD/CNH: -0.1% to 6.7093
  • USD/JPY: +0.3% to 156.20
• Data out Today:
  • 8:30 ET: August Nonfarm Payrolls (Briefing.com consensus 45,000; prior -23,000), Nonfarm Private Payrolls (Briefing.com consensus 45,000; prior 30,000), Unemployment Rate (Briefing.com consensus 4.2%; prior 4.1%), Average Hourly Earnings (Briefing.com consensus 0.2%; prior 0.1%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3)