Bond Market Update

Pressing Lower

• U.S. Treasuries are on track for a modestly lower start with longer tenors expected to show some relative weakness in the early going. Treasury futures climbed near the end of the Asian session before finding some resistance and sliding to lows over the past few hours. Geopolitical concerns have moved to the backburner after President Trump said that he will decide whether to strike Iran or continue negotiating over the next couple weeks. Crude oil futures trade lower after making another brief push toward their high from last Friday (77.62) while the U.S. Dollar Index is down 0.3% at 98.64.
• Yield Check:
  • 2-yr: +2 bps to 3.96%
  • 3-yr: +2 bps to 3.92%
  • 5-yr: +4 bps to 4.03%
  • 10-yr: +3 bps to 4.43%
  • 30-yr: +4 bps to 4.94%

• News:
  • The People's Bank of China made no changes to its one-year and five-year loan prime rates.
  • Officials from Japan's Ministry of Finance met with primary dealers to discuss a plan to reduce sales of ultra-long bonds by 10%.
  • Australia's Treasurer Chalmers is reportedly considering new taxes.
  • The Bank of England announced its latest policy decision yesterday, choosing to leave its bank rate unchanged at 4.25%, which was expected.
  • The European Central Bank highlighted the complexity of transatlantic trade in its latest Economic Bulletin, noting that nearly a third of the eurozone's goods surplus with the US is generated by American-owned firms, complicating the narrative around recent tariff disputes.
  • The European Investment Bank announced a record EUR100 billion financing ceiling for 2025 to bolster investments in European security, energy, and technological leadership.
  • China's May FDI was down 13.2% YTD (last -10.9%).
  • Japan's May National CPI was up 0.3% m/m (last 0.1%), rising 3.5% yr/yr, as expected (last 3.6%). National Core CPI was up 3.7% yr/yr (expected 3.6%; last 3.5%).
  • South Korea's May PPI was down 0.4% m/m (last -0.2%) but up 0.3% yr/yr (last 0.8%).
  • Hong Kong's May CPI was down 0.3% m/m (last -0.1%), rising 1.9% yr/yr (expected 2.0%; last 2.0%).
  • Germany's May PPI was down 0.2% m/m (expected -0.3%; last -0.6%), falling 1.2% yr/yr, as expected (last -0.9%).
  • U.K.'s May Retail Sales were down 2.7% m/m (expected -0.5%; last 1.3%), falling 1.3% yr/yr (expected 1.7%; last 5.0%). May Core Retail Sales were down 2.8% m/m (expected -0.5%; last 1.4%), falling 1.3% yr/yr (expected 1.8%; last 5.2%). May Public Sector Net Borrowing reached GBP17.69 bln (expected GBP17.90 bln; last GBP20.05 bln).
  • France's June Business Survey fell to 96 from 97 (expected 97).
• Commodities:
  • WTI Crude: -0.8% to $72.96/bbl
  • Gold: -1.2% to $3366.70/ozt
  • Copper: UNCH at $4.85/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1521
  • GBP/USD: +0.3% to 1.3497
  • USD/CNH: -0.1% to 7.1755
  • USD/JPY: +0.1% to 145.55
• Data out Today:
  • 8:30 ET: June Philadelphia Fed survey (Briefing.com consensus 0.3; prior -4.0)
  • 10:00 ET: May Leading Indicators (Briefing.com consensus -0.1%; prior -1.0%)