Treasury Market Outlook: Treasury yields are modestly cheaper
Treasury Market Outlook: Treasury yields are modestly cheaper, as are European rates, though the former are underperforming slightly. The benchmark 2-year is up 2.3 bps to 1.835%, with the 10-year 0.9 bps higher at 2.055%. The Bund is up fractionally at -0.347%, while the Gilt is 0.1 bp lower at 0.704%. The JGB finished 1.1 bps richer at -0.159%. Equities are firmer globally, led by a 1.5% gain in the DAX and a 0.95% gain in the Nikkei. The FTSE is 0.6% firmer, and U.S. futures are 0.3% higher. The news overnight was Boris Johnson taking over as the U.K.'s prime minister, having won the leadership contest within the Conservative Party. The Gilt initially edged up, but has since recovered. The question is whether he will maintain his hardline stance on Brexit. There was also some buying following much weaker than expected UK CBI industrial trends data and dovish comments from the BoE's Saunders. Positive earnings news from Coca-Cola, Sherwin-Williams, UBS Group, Banco Santander and Hermes International have helped boost stocks. Also U.S. futures have been supported by news of an agreement on the debt limit, and some progress on the U.S.-China trade front. In the U.S. today, the earning parade continues. There's data on June existing home sales, the July Richmond Fed index, and the May FHFA home price index. The Treasury auctions $40 B of 2-year notes.