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Bond Market News
Treasury Yields Climb on Renewed US-Iran Friction
July 8, 2026
US Treasury yields jumped higher with a bear flattening of the curve. This came after the US reimposed sanctions and struck several targets in Iran, following reports of attacks on commercial vessels by Iran in the Strait of Hormuz. Brent crude prices rose to nearly $75/bbl. Separately, NY Fed’s John Williams said that he was more sanguine on inflation due to a pullback in energy prices following the US-Iran agreement prior to the latest attacks.
Looking at US equity markets, the S&P and Nasdaq fell by 0.5% and 1.2% respectively. US IG CDS spreads were 0.6bp wider and HY CDS spreads widened by 3.5bp. European equity markets ended broadly lower. European IG CDS spreads were 0.6bp wider, and Crossover spreads widened by 2.2bp. Asian equity markets have opened mostly lower this morning. Asia ex-Japan CDS spreads were flat.
Rating Changes
- Grenke AG Outlook Revised To Negative On Elevated Credit Losses; ‘BBB’ Rating Affirmed
- Fitch Places airBaltic on Rating Watch Negative
- Israel-Based Phoenix Insurance Outlook Revised To Positive On Enhanced Capital Position; ‘A-‘ Ratings Affirmed
Term of the Day: MREL
MREL stands for Minimum Requirement for Own Funds and Eligible Liabilities. This is set by resolution authorities (like the Bank of England or the EU’s Single Resolution Board) to ensure that a bank maintains sufficient eligible instruments to facilitate the implementation of its preferred resolution strategy at all times. This was initiated to ensure that a failing bank has sufficient resources to absorb losses and recapitalize itself instead of requiring a public bailout using taxpayer money.
MREL involves two-parts – a loss absorption amount and a recapitalisation amount. Firms are essentially required to maintain a minimum level of equity and eligible debt, typically above minimum capital requirements (MCR), so they can be ‘bailed in’ rather than bailed out.
Talking Heads
On Gold’s Bull Market Has Ended and Now All Eyes Are on Bears
Bart Melek, TD Securities
“Most of gold’s correction seems to be long liquidations as opposed to people taking on short exposure. At this point, we just don’t have a lot of shorts in there. So there’s a lot of room to expand, and still a lot of room to cut long exposure.”
Greg Shearer, JPMorgan
“The macro/rates setup will likely continue to cap gold in a lower range over the coming quarters.”
Chris Louney, Royal Bank of Canada
“I generally see consistency in how central banks are thinking about gold reserves. If you’re trying to de-dollarize and diversify, gold stands out as that long term reserve asset that’s already a part of the global monetary system.”
On Seeing a Fragile Outlook With Risks to Inflation, Growth – Fabio Panetta, ECB
“Upside risks to inflation continue to coexist with downside risks to growth. This requires constant monitoring of geopolitical developments, energy markets, supply chains, wages and inflation expectations… also requires that monetary policy avoid committing to a predetermined path.”
On Germany Must Stabilize Debt in Long Run to Keep AAA – Elena Klare, Scope Ratings
“Over the longer-term, a stabilization of the debt ratio is critical to safeguard Germany’s fiscal space and resilience and support its AAA rating. A timely delivery of reforms would underpin the resilience of Germany’s growth by boosting the country’s growth potential and safeguarding fiscal space”
Top Gainers and Losers- 08-Jul-26*
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