Bond Market Update

Pullback in Sight

• U.S. Treasuries are on track for a mostly lower start after five days of gains that pressured yields to fresh lows for the year. Treasury futures dipped in early evening action, hitting their lowest levels near the end of Asian session, which lacked the participation of markets in India due to a holiday. Treasury futures have spent the past few hours in a rise off their overnight lows alongside gains in other sovereign debt. In Washington, the House passed a budget bill by a 217-215 vote. Separately, President Trump ordered a review of U.S. copper imports and there is a strong likelihood that Ukraine will accept a rare earths deal with the U.S. to end the war with Russia. Crude oil is little changed just below $69/bbl while the U.S. Dollar Index is up 0.2% at 106.52.
• Yield Check:
  • 2-yr: +2 bps to 4.12%
  • 3-yr: +2 bps to 4.11%
  • 5-yr: +1 bp to 4.14%
  • 10-yr: UNCH at 4.30%
  • 30-yr: -2 bps to 4.54%

• News:
  • Japanese officials are reportedly closing in on a budget agreement.
  • Hong Kong's Financial Secretary Chan said that a higher budget deficit is being recorded this year and that bond issuance will be increased.
  • China's Vice Commerce Minister Wang has met with certain U.S. business leaders to clarify China's position on U.S. tariffs. 
  • Japan's December BoJ Core CPI was up 2.2% yr/yr (expected 2.0%; last 1.9%). December Leading Index rose to 108.3 from 107.5 (expected 108.9) and Coincident Indicator was up 1.0% m/m (expected 1.4%; last -1.4%).
  • Hong Kong's Q4 GDP was up 0.8% qtr/qtr, as expected (last -1.4%), growing 2.4% yr/yr, as expected (last 1.8%).
  • Singapore's January Industrial Production rose 4.5% m/m (expected -3.5%; last -5.4%), increasing 9.1% yr/yr (expected 9.8%; last 5.2%).
  • Australia's January CPI was up 2.5% yr/yr (expected 2.6%; last 2.5%) and Q4 Construction Work Done rose 0.5% qtr/qtr (expected 1.0%; last 2.0%).
  • Germany's March GfK Consumer Climate fell to -24.7 from -22.6 (expected -21.7).
  • France's February Consumer Confidence rose to 93 from 92, as expected.
  • Spain's January PPI was up 2.6% yr/yr (last 2.3%). · Swiss February ZEW Expectations fell to 3.4 from 17.7.
• Commodities:
  • WTI Crude: -0.3% to $68.73/bbl
  • Gold: +0.3% to $2927.50/ozt
  • Copper: +3.2% to $4.626/lb
• Currencies:
  • EUR/USD: -0.4% to 1.0476
  • GBP/USD: -0.2% to 1.2642
  • USD/CNH: +0.2% to 7.2641
  • USD/JPY: +0.4% to 149.59
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.2%; prior -6.6%)
  • 10:00 ET: January New Home Sales (Briefing.com consensus 681,000; prior 698,000)
  • 10:30 ET: Weekly crude oil inventories (prior +4.63 mln)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results