Bond Market Update

Commodities Corner

• There is curve flattening action today with yields on longer-dated securities being reined in amid an improved inflation view that is flowing from a pullback in oil and copper prices.
• Several catalysts are accounting for the downshift in these key commodities:
  • Israel will reportedly hit military targets, as opposed to oil and/or nuclear targets, in its retaliation on Iran
  • The IEA is forecasting a large oil surplus for 2025
  • The Wall Street Journal reported that China's aim with its stimulus efforts is to avert a financial crisis, not massively stimulate demand
• WTI crude futures are down 4.4% to $70.52/bbl; Brent crude futures are down 4.2% to $74.18/bbl; gasoline futures are down 3.6% to $2.03/gal
• Copper futures are down 1.5% to $4.34/lb
• The 2s10s spread has narrowed to nine basis points from 13 basis points
• Yield check:
  • 2-yr: +1 bp to 3.95%
  • 3-yr: unch at 3.86%
  • 5-yr: -2 bps to 3.86%
  • 10-yr: -3 bps to 4.04%
  • 30-yr: -5 bps to 4.33%