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Early Bonds: U.S. Treasuries largely flat The U.S. session will not feature any top-tier data, but the U.S. Treasury will sell nearly $200 bln worth of debt, including $40 bln in 3-yr notes at 10:30 ET, followed a $32 bln 10-yr note reopening at 13:00 ET.
Crude oil is down after Goldman Sachs lowered its end-of-year Brent price forecast to $86 from $95
U.S. Dollar Index is down 0.1% at 103.43.Yield
2-yr: -2 bps to 4.60%
3-yr: -2 bps to 4.24%
5-yr: UNCH at 3.92%
10-yr: UNCH at 3.75%
30-yr: -1 bp to 3.88%Early Bonds U.S. Treasuries positive after CPI report is that inflation rates are moving in the right direction, although core inflation in particular will still be viewed by the Fed as “too high,” which is why the prospect of another rate hike in July will be kept alive.
The 2-yr note yield, at 4.59% shortly before the release, is down seven basis points to 4.51%.
The 10-yr note yield, which declined to 3.69% in the immediate aftermath, climbed back to 3.72%, little changed from where it stood before the report.The fed funds futures market is now pricing in a 6.9% probability of a 25 basis points rate hike tomorrow, down from 20.9% yesterday.
Yield:
2-yr: -10 bps to 4.49%
3-yr: -12 bps to 4.11%
5-yr: -9 bps to 3.83%
10-yr: -7 bps to 3.70%
30-yr: -5 bps to 3.86%U.S. Treasuries modestly higher start, The Producer Price Index for final demand declined 0.3% month-over-month in May (consensus -0.1%) while the index for final demand, less foods and energy (“core PPI) increased 0.2% month-over-month, as expected.
On a year-over-year basis, the index for final demand was up 1.1% year-over-year, versus 2.3% in April, and the index for final demand less foods and energy was up 2.8% year-over-year, versus 3.2% in April.
The key takeaway from the report is the recognition that wholesale inflation is moving in the right direction, which should be pleasing to the Fed and a reprieve for corporate profit margins.
Yields:
2-yr: -8 bps to 4.62%
3-yr: -7 bps to 4.23%
5-yr: -7 bps to 3.95%
10-yr: -5 bps to 3.79%
30-yr: -3 bps to 3.91%Early Bonds: U.S. Treasuries mostly lower start with shorter tenors expected to pace the early selling.
Bank of Japan released its latest policy statement, leaving its interest on excess reserves at -0.10% and reiterating intentions to patiently continue its easing efforts.
In Europe, hawkish comments from European Central Bank officials are solidifying expectations for another 25-bps rate hike in July.Crude oil is little changed while the U.S. Dollar Index is also flat, on track to surrender 1.4% for the week.
Yield:
2-yr: +5 bps to 4.69%
3-yr: +4 bps to 4.28%
5-yr: +2 bps to 3.94%
10-yr: UNCH at 3.73%
30-yr: -1 bp to 3.84%U.S. Treasuries retreated ahead of a three-day weekend, lifting the 2-yr yield to its highest level in more than three months while yields on longer t
[See the full post at: Bond Traders Weekly Outlook: Absorbed Flood of New Supply Lifting 2-yr Yield to 3 Month High]
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