Treasury Action: bonds and stocks are holding modest gains
Treasury Action: bonds and stocks are holding modest gains. Much of the support continues to come from expectations for central bank accommodation. Treasuries are priced for a 25 bp easing at the July 30, 31 FOMC, with dovish guidance suggesting more cuts later in the year. That's left the benchmark 2-year 1 bp lower, with the 10-year down 2.3 bps to 2.03%. The front end is underperforming ahead of this week's $113 B in shorter dated coupons and a $20 B 2-year FRN. Some safety flows amid Iranian tensions are also supporting. Concurrently, Wall Street is fractionally higher with the Nasdaq outperforming. There's hope for a face-to-face meeting between U.S. and Chinese trade negotiators. Europe traded similarly with the ECB expected to guide toward a rate cut in September. Note the BBK warned of a contraction in German Q2 GDP. Consequently, core rates finished lower with the Gilt 2.7 bps richer at 0.705%, with the Bund down 2.4 bps at -0.350%. Core bourses close higher with the DAX 0.24% firmer, while the FTSE was up 0.08%.