Fixed Income Morning Economic Report, 6-16-26

Yields are lower across the curve, even with the BOJ raising rates, but with underperformance now in the belly of the curve, in contrast to short-end underperformance seen on Monday; nonetheless, the bull-steepening bias remains. The slight pressure in the belly is perhaps indicative of markets beginning to price in the economic impact of the resumption of flows through the Strait of Hormuz; recent updates out of Qatar have suggested that it can restore half of its LNG output within a month, 80% within two months.

USTs +6 ticks trade at 109-27 the upper end of a 109-19 to 109-28+ range with SFRZ6 trading 96.115 having been in a 96.105 to 96.13 range. Overnight action saw the benchmark move sideways around the unchanged mark, before then moving higher as energy prices fell. From a yield perspective, the US 10yr remains just shy of the 4.50% mark, last at 4.44% - and well beyond pre-war levels at c. 4.00% as the inflation monster still hangs around.

On the docket today(CT); 7:30 am Import price index May 7:30 am Import price index minus fuel May 7:30 am Housing starts May 7:30 am Building permits May

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