Fixed Income Morning Economic Report, 6-8-26

Global fixed income markets are entirely in the red this morning, dragged down by higher energy prices after Israel struck Lebanon with fresh strikes, which led to retaliation from the Iranians. Following the recent attacks, President Trump suggested that the announcement of a deal with Iran was set for this week, but now new fighting is happening. But with all the back and forth, on again off again deal (I’m sure the futures will be different by the time you read this with whatever headline happens to be going through) there is still an underlying hope this will all come to an end quickly. On a positive note, the FM stated that message exchanges are ongoing with the US, through Pakistani mediators.

USTs are off by 2 ticks at 109-00+ and trade at the higher end of a 108-25 to 109-02+ range while SFRZ6 is off at 96.03, down 1 BP having been in a 95.995/96.035 range and now implying a 30% chance of 2 hikes by the end of the year!! Also in the picture is a continued hawkish repricing at the Fed, following a solid NFP report last Friday.

Markets will look towards the US CPI/PPI reports due mid-week, whereby a hawkish report could see Fed officials push for removal of the easing bias at next week’s confab. From a yield perspective, the US 10yr has taken a more decisive move above the 4.50% mark, last at 4.56%. This brings into play near-term highs from late-May at 4.63% and then the YTD high at 4.68%

On the Docket today; Nothing scheduled

Video Link: https://youtu.be/94WEfOo3FU8