Bond Market Update

Eye on Jobs Report

• U.S. Treasuries saw some curve-steepening today, with longer-dated securities underperforming shorter-dated securities. Yields rose across the curve, which might have been surprising to some given that the ADP Employment Change Report for June showed a loss of 33,000 jobs from private-sector payrolls. Market participants, though, seemed to be reserving judgment on the labor market until they get a glimpse of the more comprehensive Employment Situation Report for June, which will be released before Thursday's open. Separately, the "One Big, Beautiful Bill" remained stuck in the House, with some press reports suggesting there is dissension in the GOP ranks over its cost, holding up its passage. On a positive note, President Trump announced a trade deal with Vietnam that includes a 20% tariff on goods imported from Vietnam and the U.S. getting total access to Vietnamese markets with zero tariff. The U.S. Dollar Index was flat at 96.79.
• Yield Check:
  • 2-yr: +2 bps to 3.79%
  • 3-yr: +3 bps to 3.77%
  • 5-yr: +3 bps to 3.87%
  • 10-yr: +4 bps to 4.29%
  • 30-yr: +4 bps to 4.82%

• News:
  • House Speaker Mike Johnson is trying to address various disagreements among Republicans ahead of House vote on the reconciliation bill, according to Politico
  • House Rules Committee votes 7-6 to advance large reconciliation bill to a full House vote; House Speaker Mike Johnson says "we are on the one yard line" and expects House vote today or tomorrow depending on when all members can get back to D.C. (weather issues were impacting flights)
  • President Trump announced deal with Vietnam; says Vietnam will pay 20% tariff and 40% tariff on transshipping; says Vietnam will give U.S. "total access" to markets at zero tariff
  • President Trump threatened additional tariffs on Japan up to 35%, according to Bloomberg
  • ECB policymaker Centeno said that the central bank is in no hurry to cut rates, while policymaker Rehn said that the central bank should be on watch for inflation potentially staying below target in persistent fashion
  • The EU is resisting British Prime Minister Starmer's attempt to rejoin the EU's trading union
  • There is a growing likelihood of a rate cut from the Reserve Bank of Australia on July 8
  • President Trump says "Israel has agreed to the necessary conditions to finalize the 60 Day ceasefire [with Hamas], during which time we will work with all parties to end the war"
  • MBA Mortgage Applications Index +2.7% wk/wk, with refinance applications +7.0% and purchase applications +0.1%
  • Eurozone's May Unemployment Rate 6.3% (expected 6.2%; last 6.2%)
• Today's data:
  • The ADP Employment Change Report for June was not a good report. Private sector employment shed 33,000 jobs (Briefing.com consensus: 97,000), with the service-providing sector (-66,000) accounting for the decline and small business jobs (-47,000) bearing the brunt of the losses. The goods-producing sector added 32,000 positions.
• Commodities:
  • WTI crude: +3.1% to $67.46/bbl
  • Gold: +0.3% to $3359.70/ozt
  • Copper: +2.0% to $5.20/lb
• Currencies:
  • EUR/USD: flat at 1.1798
  • GBP/USD: -0.8% to 1.3635
  • USD/CNH: +0.1% to 7.1621
  • USD/JPY: +0.1% to 143.63
• The Day Ahead:
  • 08:30 ET: June nonfarm payrolls (Briefing.com consensus 120K; prior 139K); nonfarm private payrolls (Briefing.com consensus 123K; prior 140K); unemployment rate (Briefing.com consensus 4.2%; prior 4.2%); avg. hourly earnings (Briefing.com consensus 0.3%; prior 0.4%), and average workweek (Briefing.com consensus 34.3; prior 34.3)
  • 08:30 ET: Initial jobless claims (Briefing.com consensus 240K; prior 236K) and continuing jobless claims (prior 1974K)
  • 08:30 ET: May Trade Balance (Briefing.com consensus -$70.5B; prior -$61.6B)
  • 09:45 ET: June S&P Global US Services PMI - Final (prior 53.7%)
  • 10:00 ET: June ISM Services PMI (Briefing.com consensus 50.3%; prior 49.9%)
  • 10:00 ET; May Factory Orders (Briefing.com consensus 7.9%; prior -3.7%)
  • 10:30 ET: EIA Natural Gas Inventories (prior +96 bcf)