The yield of US Treasury bonds has hardly changed, while market participants monitor the US-China relations, analyze the latest statements of Fed policymakers and prepare for the publication of key data on the US labor market.
The yield on 5-year Treasury bonds fell by 0.9 basis points, reaching 2.851%, while the yield on 30-year bonds was 2.997% (+1.3 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, decreased by 1.4 basis points to 3.065%, while the yield on 10-year bonds increased to 2.745% (+0.4 basis points).
Tensions between the United States and China have intensified due to the visit of the Speaker of the House of Representatives of Congress Nancy Pelosi to Taiwan. This was the first visit to Taiwan by a high-ranking representative of the US government in more than 25 years. Beijing said Pelosi's visit violates the principle of “one China”. Earlier, the Chinese authorities warned Pelosi against visiting Taiwan, threatening a military response.
Pelosi's trip has heightened the concerns of market participants who are already trying to cope with worries about a slowing global economy amid rapid interest rate hikes by central banks, including the Fed, which are trying to curb rising inflation.
As for the US data, today at 13:45 GMT the S&P Global Services PMI for July will be published, and at 14:00 GMT - the ISM non-manufacturing index for July. Economists expect the S&P Global Services PMI to fall to 47.0 from 52.7 in June, while the ISM non-manufacturing index fell to 53.5 from 55.3.
One of the key events of this week will be the publication of the monthly US employment report (on Friday), which will be carefully studied for its likely impact on the Fed's rate hike plans.