Today’s Market Update:

“Treasuries Underpinned on Trade Concerns; Bayer Jumbo Deal Looms

By Edward Bolingbroke

(Bloomberg) —

Treasuries marginally higher as U.S. session gets underway amid escalating protectionist standoff between China and the U.S. weighing on stocks globally; potential for Bayer AG jumbo bond sale (75% USD, 25% EUR) to go forward Monday is being closely watched.

  • Yields richer by ~1bp across the curve with gains led by 7-year sector; Germany 10-year cheaper by half basis point vs Treasuries ahead of upcoming speaker and supply events for bunds
  • Bayer is expected to sell as much as 20 billion euros ($24 billion) of bonds in both dollars and the single currency to refinance loans financing its Monsanto acquisition
    • Given its size, rates market participants figure that at least a portion of the deal has been rate-locked, creating potential for Treasuries to benefit as hedges are unwound into deal pricing
  • CFTC positioning data released Friday showed asset managers cut net long in 10-year futures while speculators cut net short
  • 3-month dollar Libor fixed -0.13bp at 2.32469%; muted front-end flows on the follow
  • U.S. economic calendar includes NAHB housing market index at 10am; ahead this week are housing starts, Philly Fed business outlook, home sales and Markit manufacturing PMI
  • Fed speakers include Dudley (8:45am), Bostic (1pm) and Williams (4pm); Bullard and Powell speak in Sintra, Portugal later this week”

Two-year Notes are down 0.6 basis points at 2.541%, five-year Notes are down 1.5 basis points at 2.782%, and the benchmark 10-Year Bond is down 1.5 basis points at 2.906%.

 

Treasury Yields

Term  Current  Last Month
3 Month1.930%1.882%
6 Month2.069%2.079%
2 Year2.545%2.547%
5 Year2.787%2.888%
10 Year2.910%3.056%
30 Year3.039%3.197%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME5.00%
DJIA25,090.48
Crude Oil$65.19
YEN110.4740
Gold$1,279.79
1 Year CMT2.35%
1 Month LIBOR2.08494%
Fed Funds Effective1.90%
Next FOMC MeetingAugust 1, 2018
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurveyActualPrior
6/18/2018NAHB Housing Market IndexJun706870
6/19/2018Housing StartsMay1312k1287k
Housing Starts MoMMay1.90%-3.70%
Building PermitsMay1350k1364k
Building Permits MoMMay-1.00%-0.90%
6/20/2018MBA Mortgage Applications15-JunN/A-1.50%
Current Account Balance1Q-$129.0b-$128.2b
Existing Home SalesMay5.53m5.46m
Existing Home Sales MoMMay1.20%-2.50%
6/21/2018Initial Jobless Claims16-Jun220k218k
Philadelphia Fed Business OutlookJun29.034.4
Continuing Claims9-Jun1710k1697k
FHFA House Price Index MoMApr0.50%0.10%
Bloomberg Economic ExpectationsJunN/A54.5
Bloomberg Consumer Comfort17-JunN/A55.8
Leading IndexMay0.40%0.40%
6/22/2018Markit US Manufacturing PMIJun P56.156.4
Markit US Services PMIJun P56.556.8
Markit US Composite PMIJun PN/A56.6
Source: Bloomberg