Tensions are high in the global bond market as it has been experiencing volatile price movement, with long-term treasuries particularly affected. Over the past year, the BofA 10+ Year U.S. Treasury Index has declined 5.1% on a total-return basis, with even worse performance over longer periods. Experts anticipate further challenges for the bond market, with some predicting the 10-year yield could reach 5% by the end of 2024. The recent presidential debate had also impacted bond market, with yields surging as investors began to price in the possibility of a second Trump presidency, attributing stronger economic growth, higher inflation, and increased Treasury supply under the Trump administration. Similarly, the UK bond market remains cautious, reminiscing about a crisis triggered by aggressive tax-cut plans in 2022.

EQUITY

The S&P 500 reached another record high, closing above 5,500 for the first time. Tesla's stock soared on strong Q2 deliveries, while Paramount Global stock rose on speculation of a bid from billionaire Barry Diller. Asian stocks showed mixed performance, with Japan's Nikkei 225 approaching record highs while Chinese markets declined due to weak service sector activity data. The U.S. job market remains strong while the global markets are waiting for upcoming nonfarm payroll data and Federal Reserve meeting minutes.

GOLD

Recent gold price movements suggest a return to a more normalised market condition, with prices settling into a $2,300-$2,400/oz range after a 15% jump in Q1 from an aggressive central bank's purchase. The correlation between U.S. real rates and gold prices is becoming prominent again, with gold prices typically rising when rates fall and vice versa. However, the current net-long position being built by U.S. CFTC 'non-commercials' indicates that short-term price risk may still be to the upside.

OIL
Oil prices edged higher with support from lower U.S. crude stockpiles, although they closed lower after pressure from profit-taking and concerns over Hurricane Beryl's impact on Gulf production outweighed demand boosts. Meanwhile, OPEC's oil output rose in June for the second consecutive month, primarily due to increased supply from Nigeria and Iran, offsetting voluntary cuts by other members of the OPEC+ alliance.

CURRENCY

The U.S. dollar retreated in the early London session following Fed Chair Powell's hawkish comments and higher job openings. The euro edged higher, supported by data showing persistently high inflation in the eurozone's services sector. Meanwhile, the British pound remained steady ahead of the UK general election, with the opposition Labour Party expected to return to power. Markets are now pricing in expectations of interest rate cuts by 45 basis points by year-end.