Highlights
Markets are focused on rising global bond yields reflecting concern over fiscal sustainability. Those worries pushed yields higher today with Japan and UK debt leading the way. In Japan, major political parties are calling for renewed fiscal stimulus ahead of upcoming parliamentary elections -- at the same time the Bank of Japan is cutting its bond purchases. That caused long-term JGB yields to spike today. UK yields are surging again too as the market doubts the government's commitment to contain borrowing.
Meanwhile, US yields have been rising steadily in July, with benchmark 10-year yields up roughly 20 basis points, as the market anticipates higher Treasury borrowing with passage of the president's expansive big beautiful bill. Uncertainty around President Trump's tariff plans and ongoing dollar weakness are not helping. Nor are the president's attacks on the Federal Reserve's independence helping investors get comfy with long-term US debt.
The situation poses a challenge for today's $39 billion 10-year note reopening but it helps that yields have risen for five straight days. Tuesday's 3-year note sale drew tepid demand with the bid-cover ratio at a sub-par 2.51.
Of course, the market remains on watch for Trump's latest trade announcements with an expected outline of deal with the European Union at the top of the list. The Financial Times is reporting the EU will agree to a 10 percent tariff rate while talks continue, same as the UK deal outline. The FT says the EU won't get special access to the US market for sectors like autos and steel as the UK did, which will be hard for some EU members to swallow. If a 10 percent baseline tariff becomes the norm for Trump trade deals, markets can live with it.
Meanwhile, US yields have been rising steadily in July, with benchmark 10-year yields up roughly 20 basis points, as the market anticipates higher Treasury borrowing with passage of the president's expansive big beautiful bill. Uncertainty around President Trump's tariff plans and ongoing dollar weakness are not helping. Nor are the president's attacks on the Federal Reserve's independence helping investors get comfy with long-term US debt.
The situation poses a challenge for today's $39 billion 10-year note reopening but it helps that yields have risen for five straight days. Tuesday's 3-year note sale drew tepid demand with the bid-cover ratio at a sub-par 2.51.
Of course, the market remains on watch for Trump's latest trade announcements with an expected outline of deal with the European Union at the top of the list. The Financial Times is reporting the EU will agree to a 10 percent tariff rate while talks continue, same as the UK deal outline. The FT says the EU won't get special access to the US market for sectors like autos and steel as the UK did, which will be hard for some EU members to swallow. If a 10 percent baseline tariff becomes the norm for Trump trade deals, markets can live with it.
Definition
Market Focus details key factors in the coming day that will impact the economic outlook and the financial markets. These include central bank events, economic indicators, policymaker speeches as well as expected political and corporate developments.
Description
Keeping up-to-date with event schedules and the economic calendar is key to understanding the global financial system. Econoday's Market Focus allows investors and policymakers to carefully track what will be making news and moving the financial markets in the coming day.
