Bond Market Update

Recent Gains Padded

• U.S. Treasuries recorded their third consecutive day of gains after overcoming some early softness. Treasuries followed yesterday's advance with a modestly lower start after a quiet night in global markets, but the early weakness was reversed in short order. The market turned positive during the first hour of action, building on its gains as the morning went on. The trading range narrowed as the day went on, but action remained pinned to highs into the close. The market did not receive any economic data to influence today's trade and things will remain subdued on that front tomorrow. However, the U.S. Treasury will hold a $13 bln 20-yr bond reopening in the early afternoon. Crude oil fell toward $65/bbl while the U.S. Dollar Index fell 0.4% to 97.42, reaching its lowest level in nearly two weeks.
• Yield Check:
  • 2-yr: -2 bps to 3.83%
  • 3-yr: -2 bps to 3.78%
  • 5-yr: -3 bps to 3.88%
  • 10-yr: -4 bps to 4.34%
  • 30-yr: -4 bps to 4.90%

• News:
  • China's COSCO is reportedly seeking veto rights in the Panama port deal that was made in March.
  • The latest policy minutes from the Reserve Bank of Australia showed a majority view that inflation trends should be confirmed before additional easing is announced. Three out of nine policymakers opposed the central bank's pause in its rate cut campaign.
  • There is growing speculation that British Chancellor Reeves will have to call for spending cuts or higher taxes in the Autumn budget statement despite a prior pledge that taxes will not be raised.
  • The Bank of England's project to launch a digital pound could be terminated due to increasing resistance from the public.
  • The European Central Bank's lending survey for Q2 showed steady bank lending conditions and rising loan demand from households.
  • South Korea's June PPI was up 0.1% m/m (last -0.4%), rising 0.5% yr/yr (last 0.3%).
  • New Zealand's June trade surplus reached NZD142 mln (expected surplus of NZD1.02 bln; last surplus of NZD1.08 bln).
  • U.K.'s June Public Sector Net Borrowing reached GBP20.68 bln (expected GBP17.4 bln; last GBP17.44 bln) and June Public Sector Net Cash Requirements were down GBP16.108 bln (prior GBP20.959 bln).
• Commodities:
  • WTI crude: -1.0% to $65.37/bbl
  • Gold: +1.1% to $3443.10/ozt
  • Copper: +1.4% to $5.72/lb
• Currencies: 
  • EUR/USD: +0.5% to 1.1746
  • GBP/USD: +0.3% to 1.3525
  • USD/CNH: UNCH at 7.1694
  • USD/JPY: -0.5% to 146.59
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior -10.0%)
  • 10:00 ET: June Existing Home Sales (Briefing.com consensus 4.00 mln; prior 4.03 mln)
  • 10:30 ET: Weekly crude oil inventories (prior -3.86 mln)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results