Bond Market Update

Lower Start Ahead

• U.S. Treasuries are on track for a lower start with longer tenors expected to continue yesterday's show of relative weakness. Treasury futures inched lower during the early part of the night, accelerating their retreat once the focus shifted to action in Europe. Other sovereign debt has also faced pressure while gold futures touched a new record high in the $2969/ozt area before reversing. The market did not receive any significant data since yesterday's close, and things will remain quiet on that front during the U.S. session. However, Fed Chairman Powell will be on Capitol Hill today and tomorrow, testifying before the Senate Banking Committee today, followed by an appearance before the House Financial Services Committee tomorrow. Separately, the U.S. Treasury will kick off this week's auction slate with a $58 bln 3-yr note sale at 13:00 ET. Crude oil is building on yesterday's gain while the U.S. Dollar Index is down 0.1% at 108.25.
• Yield Check:
  • 2-yr: +2 bps to 4.29%
  • 3-yr: +3 bps to 4.32%
  • 5-yr: +4 bps to 4.37%
  • 10-yr: +4 bps to 4.53%
  • 30-yr: +4 bps to 4.75%

• News:
  • Australian Prime Minister Albanese said that President Trump agreed to consider a tariff exemption for steel imports from Australia.
  • South Korea's exports rose 0.8% yr/yr during the first ten days of February with chip exports increasing 1.8%.
  • South Korean think tank KDI lowered its domestic growth forecast for 2025 to 1.6% from 2.0%.
  • Germany's steelmaker association believes that new U.S. tariffs on steel and aluminum imports will divert more production volume to Europe.
  • French Prime Minister Bayrou survived another no-confidence vote.
  • Bank of England policymaker Mann said that inflation is becoming less of a threat as corporate power weakens.
  • Australia's February Westpac Consumer Sentiment ticked up 0.1% (last -0.7%). January NAB Business Survey fell to 3 from 6 and Business Confidence rose to 4 from -2.
  • France's Q4 Unemployment Rate dipped to 7.3% from 7.4% (expected 7.5%).
• Commodities:
  • WTI Crude: +1.4% to $73.36/bbl
  • Gold: -0.3% to $2925.70/ozt
  • Copper: -2.4% to $4.593/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0321
  • GBP/USD: +0.1% to 1.2379
  • USD/CNH: UNCH at 7.3102
  • USD/JPY: +0.3% to 152.38
• Data out Today:
  • 6:00 ET: January NFIB Small Business Optimism Index (actual 102.8; prior 105.1)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results