Bond Market Update

Steady Ahead of FOMC

• U.S. Treasuries are on track for a flat start with shorter tenors set to display some slight relative strength in the early going after underperforming yesterday. Treasury futures spent the night in a narrow sideways range, reaching their best levels during the past hour. The lack of movement took place even though the market received a big batch of economic data from Asia and Europe. The eurozone reported slightly better-than-expected Q2 GDP (0.1%; expected 0.0%) while France's GDP reading also exceeded expectations (0.3%; expected 0.1%). Germany, however, reported a 0.1% contraction. The market will also receive the advance reading of Q2 GDP for the U.S. at 8:30 ET and the FOMC will release its latest policy statement at 14:00 ET. Crude oil is giving back some of yesterday's gain while the U.S. Dollar Index is up 0.1% at 99.02.
• Yield Check:
  • 2-yr: -1 bp to 3.87%
  • 3-yr: UNCH at 3.82%
  • 5-yr: UNCH at 3.91%
  • 10-yr: UNCH at 4.33%
  • 30-yr: UNCH at 4.87%

• News:
  • A massive earthquake in the Pacific prompted tsunami warnings in China, Japan, and Hawaii.
  • South Korean officials have arrived in Washington to discuss trade ahead of the August 1 deadline.
  • President Trump said that India's tariff rate may end up between 20% and 25%.
  • Germany's government approved a budget for 2026.
  • Singapore's Q2 Unemployment Rate rose to 2.1% from 2.0%.
  • Australia's Q2 CPI was up 0.7% qtr/qtr (expected 0.8%; last 0.9%), rising 2.1% yr/yr, as expected (last 2.4%). June CPI Indicator was up 1.9% yr/yr (expected 2.1%; last 2.1%).
  • New Zealand's July ANZ Business Confidence hit 47.8 (last 46.3).
  • Eurozone's Q2 GDP expanded 0.1% qtr/qtr (expected 0.0%; last 0.6%), growing 1.4% yr/yr (expected 1.2%; last 1.5%). July Business and Consumer Survey rose to 95.8 from 94.2 (expected 94.5).
  • Germany's June Retail Sales rose 1.0% m/m (expected 0.5%; last -0.6%), increasing 4.9% yr/yr (last 4.6%). Flash Q2 GDP contracted 0.1% qtr/qtr, as expected (last 0.4%) but was up 0.4% yr/yr (expected 0.2%; last 0.0%).
  • France's flash Q2 GDP expanded 0.3% qtr/qtr (expected 0.1%; last 0.1%), growing 0.7% yr/yr (last 0.6%). June Consumer Spending was up 0.6% m/m (expected -0.3%; last 0.1%).
  • Italy's flash Q2 GDP contracted 0.1% qtr/qtr (expected 0.1%; last 0.3%) but was up 0.4% yr/yr (expected 0.6%; last 0.7%). May Industrial Sales fell 2.2% m/m (last 1.4%), dropping 1.8% yr/yr (last 0.9%).
  • Spain's July CPI was down 0.1% m/m (last 0.7%), rising 2.7% yr/yr (expected 2.3%; last 2.3%). July Core CPI was up 2.3% yr/yr (last 2.2%). July Business Confidence rose to -4.9 from -5.2.
  • Swiss July KOF Leading Indicators rose to 101.1 from 96.3 (expected 97.9). July ZEW Expectations rose to 2.4 from -2.1.
• Commodities:
  • WTI Crude: -0.4% to $68.94/bbl
  • Gold: UNCH at $3324.00/ozt
  • Copper: -0.2% to $5.616/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1532
  • GBP/USD: +0.2% to 1.3376
  • USD/CNH: +0.2% to 7.1896
  • USD/JPY: -0.1% to 148.31
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -3.8%; prior 0.8%)
  • 8:15 ET: July ADP Employment Change (Briefing.com consensus 78,000; prior -33,000)
  • 8:30 ET: Advance Q2 GDP (Briefing.com consensus 2.5%; prior -0.5%) and advance Q2 GDP Deflator (Briefing.com consensus 2.6%; prior 3.8%)
  • 10:00 ET: June Pending Home Sales (Briefing.com consensus 0.4%; prior 1.8%)
  • 10:30 ET: Weekly crude oil inventories (prior -3.17 mln)
  • 14:00 ET: July FOMC Rate Decision (Briefing.com consensus 4.25-4.50%; prior 4.25-4.50%)