Bond Market Update

Pulling Back

• U.S. Treasuries are on track for a lower start after a steady overnight retreat in the futures market. The night brought news of a trade deal with Japan, according to which Japan will invest $550 bln in the U.S. and open its market to auto and rice imports from the U.S. Japanese exports to the U.S. will be charged a 15% tariff. The news gave a big boost to automakers in Japan and Europe, masking a weak 40-yr bond auction in Japan. The day's economic calendar is sparse once again, though today's session will feature a $13 bln 20-yr bond reopening at 13:00 ET. Crude oil has slipped back below its 50-day moving average (66.74) while the U.S. Dollar Index is little changed at 97.39.
• Yield Check:
  • 2-yr: +1 bp to 3.84%
  • 3-yr: +1 bp to 3.79%
  • 5-yr: +2 bps to 3.90%
  • 10-yr: +2 bps to 4.36%
  • 30-yr: +3 bps to 4.93%

• News:
  • Expectations are on the rise for Japan's Prime Minister Ishiba to resign by the end of August.
  • Japan sold 40-yr bonds to weak demand.
  • Italy's Unicredit reported solid results and withdrew its bid for Banco BPM.
  • Japan's May BoJ Core CPI was up 2.3% yr/yr (expected 2.5%; last 2.5%).
  • South Korea's July Consumer Confidence rose to 110.8 from 108.7.
  • Singapore's June CPI was down 0.1% m/m (last 0.7%) but up 0.8% yr/yr (expected 0.9%; last 0.8%). June Core CPI was up 0.6% yr/yr (expected 0.7%; last 0.6%).
  • Australia's June MI Leading Index was unchanged m/m (last 0.1%).
• Commodities:
  • WTI Crude: -0.7% to $64.88/bbl
  • Gold: UNCH at $3442.10/ozt
  • Copper: +1.7% to $5.82/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1727
  • GBP/USD: +0.1% to 1.3540
  • USD/CNH: -0.2% to 7.1590
  • USD/JPY: -0.3% to 146.16
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 0.8%; 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