Bond Market Update

Pushing Higher

• U.S. Treasuries are on track for a higher start, looking to build on yesterday's solid rally that was paced by longer tenors. Treasury futures spent the bulk of the night in a sideways range, rising to highs in early morning action. The advance has been accompanied by gains in other sovereign debt with Japan's 30-yr JGBs climbing off a record low. The overnight data flow was on the light side with the eurozone reporting a wider-than-expected decrease in July Retail Sales (-0.5%; expected -0.3%) while the U.S. session will feature some noteworthy reports. The ADP Employment Change report for August (Briefing.com consensus 69,000; prior 104,000) will be released at 8:15 ET, followed by revised Q2 Productivity (Briefing.com consensus 2.4%; prior 2.4%), revised Q2 Unit Labor Costs (Briefing.com consensus 1.6%; prior 1.6%), weekly Initial Claims (Briefing.com consensus 232,000; prior 229,000), Continuing Claims (prior 1.954 mln), and July Trade Balance (Briefing.com consensus -$64.2 bln; prior -$60.2 bln) at 8:30 ET. Later in the day, the ISM Services report for August (Briefing.com consensus 50.5%; prior 50.1%) will be released at 10:00 ET. Crude oil is deepening yesterday's reversal while the U.S. Dollar Index is up 0.2% at 98.31.
• Yield Check:
  • 2-yr: -1 bp to 3.60%
  • 3-yr: -2 bps to 3.56%
  • 5-yr: -2 bps to 3.67%
  • 10-yr: -2 bps to 4.19%
  • 30-yr: -2 bps to 4.87%

• News:
  • Japan's Ministry of Finance said that current budget requests for next fiscal year are up about 6.3% year-over-year.
  • China is considering implementing new restrictions on stock speculation after China's market reached its best level in a decade.
  • The Bank of England's Decision Maker Panel raised its year-ahead CPI outlook to 3.3% from 3.2% while the three-year outlook was increased to 2.9% from 2.8%.
  • Germany's ifo Institute lowered its domestic growth forecast for 2025 to 0.2% from 0.3% while the outlook for 2026 was reduced to 1.3% from 1.5%.
  • South Korea's July Current Account surplus reached $10.78 bln (last surplus of $14.27 bln).
  • Australia's July trade surplus reached AUD7.31 bln (expected surplus of AUD4.88 bln; last surplus of AUD5.37 bln) as imports fell 1.3% m/m (last -1.5%) and exports rose 3.3% m/m (last 6.3%).
  • Eurozone's July Retail Sales were down 0.5% m/m (expected -0.3%; last 0.6%) but up 2.2% yr/yr (expected 2.4%; last 3.5%).
  • Swiss August CPI was down 0.1% m/m (expected 0.0%; last 0.0%) but up 0.2% yr/yr, as expected (last 0.2%). August Unemployment Rate remained at 2.9%, as expected.
• Commodities: 
  • WTI Crude: -0.9% to $63.40/bbl
  • Gold: -0.9% to $3604.90/ozt
  • Copper: -1.5% to $4.56/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1643
  • GBP/USD: -0.1% to 1.3430
  • USD/CNH: UNCH at 7.1415
  • USD/JPY: +0.2% to 148.33
• Data out Today:
  • 8:15 ET: August ADP Employment Change (Briefing.com consensus 69,000; prior 104,000)
  • 8:30 ET: Revised Q2 Productivity (Briefing.com consensus 2.4%; prior 2.4%), revised Q2 Unit Labor Costs (Briefing.com consensus 1.6%; prior 1.6%), weekly Initial Claims (Briefing.com consensus 232,000; prior 229,000), Continuing Claims (prior 1.954 mln), and July Trade Balance (Briefing.com consensus -$64.2 bln; prior -$60.2 bln)
  • 9:45 ET: Final August S&P Global U.S. Services PMI (prior 55.4)
  • 10:00 ET: August ISM Services (Briefing.com consensus 50.5%; prior 50.1%)
  • 10:30 ET: Weekly natural gas inventories (prior +18 bcf)
  • 13:00 ET: Weekly crude oil inventories (prior -2.39 mln)