New lows

The global sovereign bond rally continues apace this morning. The yield on 10-year Treasuries dropped to the lowest level in more than two years, hitting 1.955%, while Germany’s 10-year yield is trading within a gnat’s whisker of the ECB deposit rate at -0.4%. The huge leg-up in Italian bondsstill has legs, with the 10-year yield hitting 1.703% this morning as the government eases its budget ambitions. Analysts don’t see an end to the global rally anytime soon — with a few notable exceptions.

New heads

The extended horse-trading in Brussels over who would head up some of the European Union’s most important institutions has produced some surprising results. For markets, the most significant one is the selection of IMF chief Christine Lagarde as the next head of  the European Central Bank. She would be the second French head of the bank, the first woman, and more of a politician than a monetary policy expert. In the U.S., President Donald Trump picked Christopher Waller and Judy Shelton as his nominees for the Federal Reserve board, with both of them seen as supporting easier policy.

Nothing new

Composite purchasing-managers data from the euro area this morning showed an expansion, coming in at 52.2 in June for the highest reading since November. The headline number hid a slump in both manufacturing and business confidence. A similar reading for the U.K. came in at 49.7, the first time it has pointed to a contraction since the immediate aftermath of the Brexit referendum in 2016. U.S. PMI numbers for June are due at 9:45 a.m. Eastern Time.

Markets mixed

Overnight, the MSCI Asia Pacific Index slipped 0.3% while Japan’s Topix index closed 0.7% lower as the yen strengthened against the dollar and tech stocks reversed some of their recent gains. In Europe, the Stoxx 600 Index was 0.8% higher at 5:50 a.m. in a broad-based rally which sees only the oil and gas sector lower on the day. S&P futures point to a gain at the open, Treasury yields are as outlined above and gold is higher.

Coming up

With the holiday tomorrow, today sees something of an eco-data dump. At 8:15 a.m., ADP employment change will give investors at look at the job market ahead of Friday’s payrolls data. Weekly jobless claims and the May U.S. trade balance are at 8:30 a.m. Durable goods, factory orders and ISM non-manufacturing are all at 10:00 a.m. The NYSE is closing at 1:00 p.m. ahead of the holiday.