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Treasury Market Outlook: Treasury and EGB yields are a little richer.

Treasury Market Outlook: Treasury and EGB yields are a little richer on risk aversion and central bank easing expectations. European sovereigns are pacing the rally with the Gilt down 4.5 bps to 0.773%, with the Bund down 3.8 bps at -0.286%. The 10-year Treasury is off 1.2 bps at 2.09%, with the 2-year 0.4 bps lower at 1.846%. Yesterday's comments from Fed Chair Powell and Evans continued to underpin rate cut hopes and offset stronger data. Meanwhile, equities are cautious amid renewed worries over trade tensions after threats from President Trump about imposing additional tariffs, Brexit risks revealed by increasingly harsh rhetoric, and mixed earnings news. Asian shares closed with small declines, while European bourses are weaker, with U.S. futures are fractionally firmer but a losing steam. Oil prices are bouncing a bit after diving yesterday on indications that U.S.-Iran tensions could be easing. The German 30-year auction was effectively undersubscribed. Eurozone HICP was revised up, and construction output declined. Singapore non-oil exports plunged -17.3% y/y thanks to the trade tensions. In the U.S. today's there's June housing starts and weekly oil inventories. MBA reported mortgage applications declined another 1.1% in the July 12 week. The Beige Book for the July 30-31 FOMC meeting will be released. Earnings include Abbott Labs, Bank of America, Bank of NY Mellon, Comerica, Crown Castle, eBay, Ericsson, Netflix, PNC, Progressive, Textron, U.S. Bancorp, and Wipro.

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Publication:The Fly
Date:Jul 17, 2019
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