Bond Market Update

Extending Midweek Rally

• U.S. Treasuries are on track for a higher start ahead of the 8:30 ET release of July PPI (Briefing.com consensus 0.2%; prior 0.0%). Treasury futures saw very little movement during the Asian session, extending to highs shortly after the focus turned to action in Europe. Longer tenors have been at the forefront of the advance, continuing their outperformance from yesterday. There has been continued focus on rate expectations with President Trump saying that he could name a new Fed Chair "a little bit early" and that the fed funds rate should be three or four points lower. Crude oil is rising off its lowest level since early June while the U.S. Dollar Index is down 0.1% at 97.79.
• Yield Check:
  • 2-yr: -3 bps to 3.66%
  • 3-yr: -4 bps to 3.62%
  • 5-yr: -4 bps to 3.73%
  • 10-yr: -4 bps to 4.20%
  • 30-yr: -3 bps to 4.80%

• News:
  • Lenovo CEO said that the tariff impact has been limited and that his outlook for fiscal 2026 has improved.
  • Norway's central bank left its policy rate at 4.25%, but hinted at some easing later this year. 
  • South Korea's July Import Price Index was down 5.9% yr/yr (last -6.2%) and Export Price Index was down 4.3% yr/yr (last -4.5%).
  • India's July WPI Inflation was down 0.58% (expected -0.30%; last -0.13%). July trade deficit reached $27.35 bln (last deficit of $18.78 bln).
  • Australia's July Employment increased by 24,500 (expected 25,300; last 1,000) and full employment increased by 60,500 (last -36,700). July Unemployment Rate fell to 4.2% from 4.3%, as expected, and Participation Rate remained at 67.0% (expected 67.1%).
  • Eurozone's Q2 GDP expanded 0.1% qtr/qtr, as expected (last 0.6%), growing 1.4% yr/yr, as expected (last 1.5%). Q2 Employment increased by 0.1% qtr/qtr (expected 0.2%; last 0.2%), rising 0.7% yr/yr (expected 0.6%; last 0.7%). June Industrial Production was down 1.3% m/m (expected -0.9%; last 1.1%) but up 0.2% yr/yr (expected 1.7%; last 3.1%).
  • U.K.'s Q2 Business Investment was down 4.0% qtr/qtr (expected 0.1%; last 3.9%) but up 0.1% yr/yr (last 6.1%). June Construction Output was up 0.3% m/m, as expected (last -0.5%); 1.5% yr/yr (expected 1.3%; last 1.4%). Q2 GDP expanded 0.3% qtr/qtr (expected 0.1%; last 0.7%), growing 1.2% yr/yr (expected 1.0%; last 1.3%). June Industrial Production was up 0.7% m/m (expected 0.3%; last -1.3%), rising 0.2% yr/yr (expected -0.3%; last -0.2%). June Manufacturing Production was up 0.5% m/m (expected 0.4%; last -1.0%) and was unchanged yr/yr (expected -0.9%; last 1.0%). June trade deficit reached GBP22.16 bln (expected deficit of GBP21.70 bln; last deficit of GBP22.05 bln). Q1 Labour Productivity decreased 0.6% (expected -0.5%; last 0.3%).
  • France's July CPI was up 0.2% m/m, as expected (last 0.4%), rising 1.0% yr/yr, as expected (last 1.0%).
  • Swiss July PPI was down 0.2% m/m (expected 0.0%; last -0.1%), falling 0.9% yr/yr (last -0.7%).
• Commodities:
  • WTI Crude: +0.5% to $62.93/bbl
  • Gold: -0.2% to $3403.00/ozt
  • Copper: -0.5% to $4.474/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1686
  • GBP/USD: UNCH at 1.3570
  • USD/CNH: -0.1% to 7.1721
  • USD/JPY: -0.5% to 146.55
• Data out Today:
  • 8:30 ET: July PPI (Briefing.com consensus 0.2%; prior 0.0%), Core PPI (Briefing.com consensus 0.2%; prior 0.0%), weekly Initial Claims (Briefing.com consensus 228,000; prior 226,000), and Continuing Claims (prior 1.974 mln)
  • 10:30 ET: Weekly natural gas inventories (prior +7 bcf)