Fixed Income Morning Economic Report, 6-4-26

Fixed income markets are mixed as energy prices cool a touch after President Trump said Iran negotiations are going well, with him suggesting a deal could happen over the weekend. Though noted that it could go another two or three weeks. Separately, reports suggest that Israel and Lebanon agreed to a ceasefire, though recent reports have suggested that the Israeli army is continuing its operations in the region. USTs (+7 ticks at 109-21+) are firmer and trade at the top of a 109-12+ to 109-22 range while SFRZ6 is trading 96.14 also at the top of a 96.105/96.145 range implying an 88% chance of a hike by the year end. Really not much driving the action this morning aside from geopolitics, but domestic data will likely garner some attention later as traders position themselves ahead of tomorrow’s NFP. Yesterday ISM Services PMI beat expectations but gives another hint at US inflation with FEDspeak talking on leaving rates as is, particularly as ADP employment beat expectation. New caveats seem to be coming every day for Iran war peace deal and as new strikes are claimed by Iran, equities tilt lower on Lebanon deal and poor results from Broadcom spilling into tech stocks. Worth noting too is that even though the US House backs resolution to curb Trump war powers it still needs to be ratified by Senate.

On the Docket today (Central Time); 7:30 am Initial jobless claims May 30 215,000 215,000 7:30 am U.S. productivity Q1 0.6% 0.8% 7:30 am Richmond Fed President Tom Barkin speech 9:00 am Federal Reserve Vice Chair for Supervision Michelle Bowman testifies to House panel 12:00 pm Kansas City Fed President Jeff Schmid speech

Video link: https://youtu.be/-HGC5-AtRAs