Bond Market Update

Lower Start Ahead of July CPI

• U.S. Treasuries are on track for a modestly lower start ahead of the 8:30 ET release of July CPI (Briefing.com consensus 0.2%; prior 0.3%) and Core CPI (Briefing.com consensus 0.1%; prior 0.3%). Treasury futures spent the night in a narrow range, slipping to lows in early evening trade, followed by a bounce that continued into the European session, but was also reversed. The modest selling has taken place alongside similar weakness in other sovereign debt while global equities have had a generally positive showing with Japan's Nikkei (+2.2%) reaching a fresh record. Crude oil holds a slim loss while the U.S. Dollar Index is up 0.1% at 98.59.
• Yield Check:
  • 2-yr: +2 bps to 3.77%
  • 3-yr: +2 bps to 3.74%
  • 5-yr: +2 bps to 3.84%
  • 10-yr: +2 bps to 4.29%
  • 30-yr: +2 bps to 4.86%

• News:
  • The Reserve Bank of Australia lowed its cash rate by 25 basis points to 3.60%, as expected. The central bank also lowered its terminal rate forecast to 2.90% from 3.20%.
  • The Asian session went by without any trades in Japan's 10-yr JGB for the first time since March 2023.
  • South Korea's President Lee will meet with President Trump on August 25.
  • Taiwan is seeking to establish a strategic partnership with the U.S. in order to receive a lower tariff rate.
  • Italy is aiming to reduce Chinese investments in strategic companies.
  • The EU is preparing its 19th package of sanctions against Russia.
  • Japan's July M2 Money Stock grew 1.0% yr/yr (expected 0.8%; last 0.9%).
  • India's July CPI was up 1.55% yr/yr (expected 1.76%; last 2.10%).
  • Singapore's Q2 GDP expanded 1.4% qtr/qtr, as expected (last -0.5%), growing 4.4% yr/yr (expected 4.3%; last 4.1%).
  • Australia's July NAB Business Confidence rose to 7 from 5 while Business Survey fell to 5 from 7.
  • Eurozone's August ZEW Economic Sentiment fell to 25.1 from 36.1 (expected 28.1).
  • Germany's August ZEW Economic Sentiment fell to 34.7 from 52.7 (expected 39.5) and ZEW Current Conditions fell to -68.6 from -59.5 (expected -65.0).
  • U.K.'s June Average Earnings Index + Bonus was up 4.6% yr/yr (expected 4.7%; last 5.0%). June three-month employment increased by 238,000 (last 134,000) and June Unemployment Rate remained at 4.7%, as expected. July Claimant Count decreased by 6,200 (expected 19,7000; last -15,500).
• Commodities:
  • WTI Crude: -0.6% to $63.55/bbl
  • Gold: -0.4% to $3390.90/ozt
  • Copper: +0.6% to $4.465/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1600
  • GBP/USD: +0.2% to 1.3449
  • USD/CNH: UNCH at 7.1944
  • USD/JPY: +0.3% to 148.48
• Data out Today:
  • 6:00 ET: July NFIB Small Business Optimism Index (actual 100.3; prior 98.6)
  • 8:30 ET: July CPI (Briefing.com consensus 0.2%; prior 0.3%) and Core CPI (Briefing.com consensus 0.1%; prior 0.3%)
  • 14:00 ET: July Treasury Budget (Briefing.com consensus -$140.0 bln; prior $27.0 bln)