Bond Market Update

Monday Losses Narrowed

• U.S. Treasuries finished Tuesday with modest gains across the curve, reclaiming some of their losses from Monday's slide. However, the entirety of the advance took place at the start, followed by a mostly sideways drift into the afternoon. Treasuries opened in positive territory after a night that saw the Japanese yen hit its lowest level against the dollar since late 1986. Treasuries added to their starting gains during the first hour of action, briefly pressuring the 10-yr yield back below its 50-day moving average (4.437%). However, the market found resistance near yesterday's highs, returning to the day's opening levels alongside the release of the Job Openings and Labor Turnover Survey for May, which showed that job openings increased to 8.140 million from 7.919 million in April. The trading range narrowed as the day went on with the 5-yr note finishing slightly ahead of other tenors. Crude oil briefly climbed above $84/bbl before reversing while the U.S. Dollar Index fell 0.2% to 105.73. The market will receive a heavy batch of data tomorrow and the Treasury market will close at 14:00 ET.
• Yield Check:
  • 2-yr: -3 bps to 4.74%
  • 3-yr: -4 bps to 4.55%
  • 5-yr: -4 bps to 4.40%
  • 10-yr: -4 bps to 4.44%
  • 30-yr: -3 bps to 4.61%

• News:
  • Chicago Fed President (non-voter) Goolsbee said that the Fed should prepare for rate cuts.
  • German industrial conglomerate Siemens plans to hire 10,000 new employees in its electricity division.
  • There was some speculation that the People's Bank of China could lower its reserve requirement ratio due to a growing supply of bonds.
  • The latest policy Minutes from the Reserve Bank of Australia showed that policymakers see inflation as consistent with returning to target in 2026.
  • Japan's June Monetary Base was up 0.6% yr/yr (expected 1.0%; last 0.9%).
  • South Korea's June CPI was down 0.2% m/m (expected 0.1%; last 0.1%) but up 2.4% yr/yr (expected 2.7%; last 2.7%).
  • Hong Kong's May Retail Sales fell 11.5% yr/yr (last -14.7%).
  • Eurozone's June CPI was up 0.2% m/m (last 0.2%), rising 2.5% yr/yr, as expected (last 2.6%). June Core CPI was up 0.3% m/m (last 0.4%), rising 2.9% yr/yr (expected 2.8%; last 2.9%). May Unemployment Rate remained at 6.4%, as expected. 
  • Italy's May Unemployment Rate remained at 6.8% (expected 6.9%).
  • Spain's June Unemployment decreased by 46,800 (expected -50,900; last -58,700).
• Today's Data:
  • Job openings increased to 8.140 mln in May from a downwardly revised 7.919 mln (from 8.059 mln) in April
• Commodities:
  • WTI crude: -0.8% to $82.77/bbl
  • Gold: -0.3% to $2333.30/ozt
  • Copper: +0.2% to $4.42/lb
• Currencies:
  • EUR/USD: UNCH at 1.0743
  • GBP/USD: +0.3% to 1.2685
  • USD/CNH: UNCH at 7.3068
  • USD/JPY: UNCH at 161.48
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior 0.8%)
  • 8:15 ET: June ADP Employment Change (Briefing.com consensus 163,000; prior 152,000)
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 235,000; prior 233,000), Continuing Claims (prior 1.839 mln), and May Trade Balance (Briefing.com consensus -$76.0 bln; prior -$74.6 bln)
  • 9:45 ET: S&P Global U.S. Services PMI (prior 55.1)
  • 10:00 ET: June ISM Non-Manufacturing Index (Briefing.com consensus 52.5%; prior 53.8%) and May Factory Orders (Briefing.com consensus 0.3%; prior 0.7%)
  • 10:30 ET: Weekly crude oil inventories (prior +3.59 mln)
  • 12:00 ET: Weekly natural gas inventories (prior +52 bcf)
  • **Equity market to close at 13:00 ET; Treasury market to close at 14:00 ET**
  • 14:00 ET: June FOMC Minute