Bond Market Update

Long End Ahead

• U.S. Treasuries are on track for a modestly higher start to the week with longer tenors expected to show some relative strength in the early going. Treasury futures began inching higher last evening, continuing their upward push in slow fashion as the night went on. The market dipped from early-morning lows in recent trade, though it is keeping the bulk of its overnight gains for the time being. The new week has brought just a small slate of data, including China's July CPI reading, which narrowly avoided deflation (0.0%; expected -0.1%). PPI (-3.6%; expected -3.4%), however, remained in deflation for the 34th consecutive month. The tariff truce with China is set to expire tomorrow, so the market will be on the lookout for reports about another potential extension. Crude oil is modestly higher while the U.S. Dollar Index is up 0.3% at 98.43.
• Yield Check:
  • 2-yr: UNCH at 3.76%
  • 3-yr: -1 bp to 3.72%
  • 5-yr: -1 bp to 3.82%
  • 10-yr: -2 bps to 4.27%
  • 30-yr: -3 bps to 4.83%

• News:
  • President Trump aims to meet with Russia's President Putin in Alaska on Friday.
  • President Trump expressed hope that China will significantly increase its soybean purchases from the U.S. ahead of tomorrow's expiration of the temporary extension of lower tariffs.
  • South Korea's exports through the first ten days of August were down 4.3% yr/yr but chip exports rose 12.0%.
  • The U.S. government will charge NVIDIA (NVDA) and AMD (AMD) 15% of their revenue generated in China.
  • Treasury Secretary Bessent said that he expects trade issues to be largely sorted out by the end of October.
  • British Chancellor Reeves is reportedly considering a tax hike in the Autumn budget, though she previously pledged not to increase taxes on income, national insurance, and value-added.
  • China's July CPI was up 0.4% m/m (expected 0.3%; last -0.1%) and was unchanged yr/yr (expected -0.1%; last 0.1%). July PPI was down 3.6% yr/yr (expected -3.4%; last -3.6%).
  • Italy's July CPI was up 0.4% m/m, as expected (last 0.2%), rising 1.7% yr/yr, as expected (last 1.7%). June trade surplus reached EUR5.41 bln (expected surplus of EUR7.12 bln; last surplus of EUR6.10 bln).
• Commodities:
  • WTI Crude: +0.5% to $64.18/bbl
  • Gold: -2.4% to $3409.20/ozt
  • Copper: -0.9% to $4.433/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1629
  • GBP/USD: -0.1% to 1.3431
  • USD/CNH: +0.1% to 7.1921
  • USD/JPY: +0.1% to 147.86
• No Data on Today's Schedule