Bond Market Update

Long End Ahead

• U.S. Treasuries are on track for a modestly higher start to the week with the long end set to show early strength after underperforming last week. Treasury futures inched higher in early evening trade while Asian equity markets had a mostly positive outing. Japan's Nikkei was closed for a holiday, delaying the market's chance to respond to the results of a weekend election, which produced a loss of majority for the ruling LDP. However, Prime Minister Ishiba will attempt to remain in his post. Treasury futures accelerated to highs during the European session, which is seeing some pressure on equities after President Trump spoke in favor of a 15-20% tariff on imports from Europe while EU officials had hoped for a 10% baseline tariff. Crude oil is little changed near $66/bbl while the U.S. Dollar Index is down 0.4% at 98.13.
• Yield Check:
  • 2-yr: -3 bps to 3.85%
  • 3-yr: -4 bps to 3.80%
  • 5-yr: -5 bps to 3.91%
  • 10-yr: -6 bps to 4.37%
  • 30-yr: -7 bps to 4.93%

• News:
  • Treasury Secretary Bessent advised President Trump to not fire Fed Chairman Powell since the Fed is expected to cut rates later this year, according to The Wall Street Journal.
  • The People's Bank of China made no changes to its one-year (3.0%) and five-year (3.5%) loan prime rates.
  • A weekend meeting between Treasury Secretary Bessent and Japan's top trade negotiator in Osaka did not yield any noteworthy results.
  • Australia's ambassador to the U.S. said that the joint submarine project with the U.S. and the U.K. is under review.
  • Discount air carrier Ryanair reported a record profit for Q1 while automaker Stellantis reported weak results for the first half of the year.
  • The EU is reportedly looking into banning car rental companies and large corporations from buying non-electric vehicles for their fleets starting in 2030.
  • Hong Kong's July CPI was unchanged m/m (last -0.3%), rising 1.4% yr/yr (expected 1.5%; last 1.9%).
  • New Zealand's Q2 CPI was up 0.5% qtr/qtr (expected 0.6%; last 0.9%), rising 2.7% yr/yr (expected 2.8%; last 2.5%).
  • U.K.'s July Rightmove House Price Index was down 1.2% m/m (last -0.3%) but up 0.1% yr/yr (last 0.8%).
• Commodities:
  • WTI Crude: +0.1% to $66.08/bbl
  • Gold: +0.7% to $3380.10/ozt 
  • Copper: +0.5% to $5.63/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1666
  • GBP/USD: +0.5% to 1.3474
  • USD/CNH: -0.1% to 7.1740
  • USD/JPY: -0.8% to 147.52
• Data out Today:
  • 10:00 ET: June Leading Indicators (Briefing.com consensus -0.1%; prior -0.1%)