1538 ET – Treasury yields decline as markets show little reaction to Trump’s attempt to fire Fed Governor Cook. She pledged to fight back, raising the prospect of a potentially lengthy legal fight. “By the time we get to litigate this, there’s very good reason to be cutting rates,” DWS Group’s George Catrambone says. He calls the push against Cook “a distraction.” Catrambone expects employment to trend downward, which would support monetary easing. July durable goods orders contract less than forecast and August consumer confidence slips. The 10-year yield drops 0.019 percentage point to 4.255% and the two-year falls 0.051 p.p. to 3.676%, reaching their widest spread since April. (paulo.trevisani@wsj.com; @ptrevisani)
Long-Dated U.S. Treasury Yields Rise as Trump Aims to Remove Fed Governor Cook
0940 GMT – U.S. long-dated Treasury yields rise in European trade after President Trump moved to fire Federal Reserve governor Lisa Cook over alleged fraudulent information on mortgage applications. “Treasury yields rose slightly as increased government impact on the Federal Reserve’s role could erode confidence and weigh on U.S. Treasurys, driving yields up,” says Kudotrade’s Konstantinos Chrysikos in a note. Meanwhile, investors await further data to provide fresh direction. U.S. durable goods data are due Tuesday, followed by second-estimate GDP and jobless claims Thursday, then PCE inflation Friday. The 10-year yield rises 2.7 basis points to 4.301% and the 30-year yield is up 4.7 basis points at 4.936%, Tradeweb data show. (
emese.bartha@wsj.com
)
French Yields Likely to Rise as Political Stalemate Leaves Deficit Crisis Unsolved
1021 GMT – The cost of French public debt is likely to rise amid political and fiscal tangles, Capital Economics’ Andrew Kenningham says after PM Francois Bayrou called a confidence vote in a National Assembly mired in deadlock. The most likely outcome is that Bayrou loses the vote and President Emmanuel Macron replaces him with a fourth premier in little over a year, Kenningham says. That would solve neither the political deadlock nor France’s acute deficit problem. “France’s political arithmetic does not add up any more than its fiscal arithmetic,” he says. Continued failure to reduce the budget deficit could worsen the crisis and harm market confidence, Kenningham says. “We continue to think the outlook for French public debt is very poor,” he says. (
joshua.kirby@wsj.com
; @joshualeokirby)
U.K. 30-Year Sovereign Bond Yields Rise, Tracking U.S. Peers
1139 GMT – U.K. 30-year gilt yields climb, tracking their U.S. counterparts, after President Trump moved to fire Lisa Cook, a member of the U.S. Federal Reserve Board. Investors are concerned about the Fed’s ability to make independent monetary policy decisions and to contain U.S. inflation in the long term. President Trump’s decision “brings increased economic instability concerns,” Rostro’s Joshua Mahony says in a note. Markets fear that the Fed might base interest rate decisions on the desires of the President rather than economic theory, he says. Thirty-year gilt yields earlier climbed to their highest in over 4 months at 5.632%, and last trade at 5.605%, Tradeweb data show. Thirty-year U.S. Treasury yields rise 3 basis points to 4.920%. (
miriam.mukuru@wsj.com
)
Budget Uncertainty Could Increase French OAT Volatility
0855 GMT – French government bonds, or OATs, are expected to face increased volatility and pressure in the coming days, ahead of Prime Minister Francois Bayrou’s vote of confidence over fiscal policies, says Jefferies’ Mohit Kumar in a note. The current government doesn’t have an absolute majority and relies on the support of the moderate left and moderate right factions, the global economist says. “However, any attempt to cut public spending is likely to be met with opposition from the various parties,” Kumar says. One of Jefferies’ core positions has been to be short French government bonds versus Italian peers and it maintains this view, he says. The 10-year OAT-Bund yield spread widens about 5 basis points to 78bps, according to Tradeweb. (
emese.bartha@wsj.com
)
French OAT-German Bund 10-Year Yield Spread Widens As Govt Seeks Confidence Vote
0803 GMT – French government bonds, or OATs, underperform eurozone peers as Prime Minister Francois Bayrou seeks a parliamentary vote on Sept. 8 on his government’s plans for budget cuts. Widening spreads between 10-year French OAT and German Bund yields reflect a “fairly high probability of a non-confidence vote in the market’s view,” say Natixis’ analysts in a note. Given the government’s relative majority, the outcome will ride on whether opposition parties abstain, Natixis says. “Until then, pressure on OATs is set to rise, and they are likely to underperform other European government bonds.” The 10-year OAT-Bund yield spread widens 4 basis points to 77bps, while spreads between yields on other eurozone government bonds and their German equivalents narrow, according to Tradeweb. (
emese.bartha@wsj.com
)
Souring Risk Sentiment Might Test Bond Market Selloff
0619 GMT – The bond market selloff and curve steepening are put to the test as risk sentiment is souring, says Commerzbank Research’s Hauke Siemssen in a note. “It seems questionable though whether the adverse dynamics at the ultra-long end will change with Trump adding to the U.S. risk premium,” the rates strategist says. President Trump moved to remove Federal Reserve governor Lisa Cook, citing allegations of fraudulent information on mortgage applications. Less-liquid trade in eurozone government bonds Monday due to a bank holiday in the U.K. probably added to the selloff. Shortly after opening, the 10-year German Bund yield eases 3.7 basis points to 2.726%, according to LSEG. (
emese.bartha@wsj.com
)
U.S. Treasury Yields Mostly Rise as Trump Moves to Remove Fed’s Cook
0557 GMT – U.S. Treasury yields rise for maturities of five years and longer in Asian trade after President Trump moved to fire Federal Reserve governor Lisa Cook over allegations of fraudulent information on mortgage applications. “This unprecedented move could test the Fed’s independence and Cook’s removal would allow Trump to reshape the Fed board further, potentially influencing future monetary policy,” says Danske Bank’s Asger Wilhelm Dalsjo in a note. Cook denies allegations. Markets responded with shifts in Treasury yields, reflecting potential policy changes and uncertainty over the Fed’s future direction, the analyst says. The two-year Treasury yield eases 1.5 basis points to 3.714%; the 10-year yield rises 2.7 basis points to 4.301%, while the 30-year yield is up 4 basis points at 4.929%.