Bond Market Update

Waiting

• U.S. Treasuries experienced a relatively uneventful overnight trade that included limited action in the forex market and a post by President Trump that President Xi is "very tough and extremely hard to make a deal with." There is a wait-and-see stance in front of several economic data points today, including the ADP Employment Change Report for May at 8:15 a.m. ET, the May ISM Services PMI at 10:00 a.m. ET, and the Fed's Beige Book at 2:00 p.m. ET. The front of the curve is slightly underperforming the back end of the curve in the early going. The U.S. Dollar Index is unchanged at 99.23.
• Yield Check:
  • 2-yr: +1 bp to 3.97%
  • 3-yr: +2 bps to 3.94%
  • 5-yr: +2 bps to 4.04%
  • 10-yr: unch at 4.46%
  • 30-yr: unch at 4.98%

• News:
  • President Trump acknowledges that President Xi is "very tough and extremely hard to make a deal with," according to Bloomberg
  • Steel and aluminum tariff hike to 50%, effective today; UK exempt for five-weeks, according to Bloomberg
  • Senate Leader Thune suggests SALT deduction cap in House bill will need to change, according to Bloomberg
  • Rising cost for hedging currency risk reduces appeal of owning Treasuries for foreign investors, according to The Wall Street Journal
  • Automakers express concerns about production disruption due to China's export restrictions, according to Reuters
  • China Securities Journal reported that the People's Bank of China is fine-tuning liquidity levels to meet mid-year needs
  • Germany's government approved a EUR46 bln corporate tax relief plan
  • MBA Mortgage Applications Index -3.9% wk/wk, with refinance applications down 4% and purchase applications down 4%
  • Japan's May Services PMI 51.0 (expected 50.8; last 52.4)
  • Eurozone's May Services PMI 49.7 (expected 48.9; last 50.1)
• Commodities:
  • WTI crude: unch at $63.41/bbl
  • Gold: -0.2% to $3371.30/ozt
  • Copper: +0.4% to $4.85/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1382
  • GBP/USD: flat at 1.3520
  • USD/CNH: flat at 7.1899
  • USD/JPY: +0.2% to 144.27
• The Day Ahead:
  • 08:15 ET: May ADP Employment Change (Briefing.com consensus 115K; prior 62K)
  • 09:45 ET: May S&P Global US Services PMI (prior 50.8)
  • 10:00 ET: May ISM Services (Briefing.com consensus 52.0%; prior 51.6%)
  • 10:15 ET: Atlanta Fed President Bostic (non-FOMC voter) and Fed Governor Cook (FOMC voter) at Fed Listens event
  • 10:30 ET: EIA Crude Oil Inventories (prior -2.80M)
  • 14:00 ET: Fed's Beige Book