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Bond Market News
Temasek Launches S$ 10Y Bond
August 3, 2026
The US Treasury curve bear steepened on Friday, extending the move from a day prior. Late last week, US President Donald Trump threatened to launch massive strikes on Iran, however, he has since “cancelled” the planned military strikes noting that they are “rapidly” reaching a deal on Iran’s nuclear programme and the full reopening of the Strait of Hormuz. Brent crude fell by over 5%. On the data front, the final reading of the Michigan Consumer Sentiment Index came in at 55.2, better than expectations of 54.0.
Looking at equity markets, the S&P and Nasdaq ended 0.7% and 1.0% higher respectively. US IG CDS spreads were 0.3bp tighter and HY CDS spreads tightened by 1.5bp. European equity markets ended mostly higher. European IG CDS spreads were 0.1bp tighter, while Crossover spreads tightened by 1.6bp. Asian equity markets have opened mixed this morning. Asia ex-Japan CDS spreads were 1.5bp tighter. The BOJ voted 8-1 to hold its policy rate steady at 1.0%. Separately, Japan and the US conducted a coordinated yen-buying intervention where the latter sold euros to buy yen, amid the yen’s decline to 40-year lows. China’s Manufacturing PMI for July fell into contraction territory at 49.2 vs. expectations of 50.1.
New Bond Issues
- Temasek S$ 10Y at 2.7% area
- Korean Air Lines $ 3Y bond at T+90bp area
Rating Changes
- Fitch Upgrades China Vanke to ‘CC’ on Completion of Distressed Debt Exchange
- Fitch Downgrades Hertz to ‘CCC’
- Fitch Downgrades CSN’s IDRs to ‘CCC+’; Maintains RWN; Rates New Proposed Unsecured Issuance ‘CCC+’
- Petra Diamonds Ltd. Downgraded To ‘SD’ Following Interest Payment Deferral; Issue Rating Lowered To ‘CCC’
Term of the Day: Backwardation
Backwardation occurs when the current spot price of crude oil is higher than futures prices for later dates. This creates a downward-sloping market curve, implying tight suppy dynamics due to immediate shortages, geopolitical tensions, or strong current demand. This causes spot physical oil to be more valuable than in the future.
The current crude oil curve is downward sloping or in a backwardation due to the US-Iran tensions where the Strait of Hormuz has been shut amongst other developments, causing a shortage of supply.
Talking Heads
On Bond Traders Flying Blind on Fed See Risk Yields Spiral Higher
Tracy Chen, Brandywine
“It’s dangerous to step into the long end of the curve. If inflation in the next two months stays high and the Fed doesn’t hike in September, the bond vigilantes will go nuts.”
Ben Emons, Highline Asset Management
“This does not come as a total surprise given Warsh’s focus on changing the way the Fed communicates with markets and the public”
On Treasury selloff signals need to bolster Fed’s inflation credibility
Alberto Musalem, St. Louis Fed President
“At this juncture, earlier, incremental, gradual interest-rate action is preferable, less costly and less disruptive than potentially later, larger and abrupt actions”
On Ugly Month in Emerging Markets May Be a Taste of What’s Ahead
Roger Mark, Ninety One Asset
“There are lots of unknowns and you can paint a picture where things get uglier quite easily”
Chandan Khanna, William Blair
“We’ve just had an air pocket in terms of normalization partly because of retail leverage coming off, which long term perspective is quite healthy”
Top Gainers and Losers- 03-Aug-26*
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