Bond Market Update

Rising Again

• U.S. Treasuries are on track for a modestly higher start, looking to reclaim a chunk of their losses from yesterday. Treasury futures began rising shortly after yesterday's cash close, continuing their advance into the night. The market reached highs during the second half of the Asian session, followed by some backtracking that has reversed roughly half of the overnight rally. Tariffs remained atop the conversation with China saying in response to to President Trump's reminder about impending tariffs that "all necessary countermeasures" will be taken to protect the country's interests. The market received a cooler-than-expected February CPI report from France (0.2%; expected 0.5%) while Germany's flash February CPI was up an in-line 0.4%. Crude oil is reversing the bulk of yesterday's advance while the U.S. Dollar Index is up 0.1% at 107.32.
• Yield Check:
  • 2-yr: -3 bps to 4.05%
  • 3-yr: -3 bps to 4.03%
  • 5-yr: -3 bps to 4.07%
  • 10-yr: -3 bps to 4.26%
  • 30-yr: -2 bps to 4.53%

• News:
  • A draft document from China's Politburo indicated that the commitment to introducing proactive macroeconomic policies will be reiterated.
  • Bank of Japan Governor Ueda said that the central bank is open to increasing its purchases of JGBs if longer-term rates rise in abnormal fashion.
  • President Trump said during a meeting with British Prime Minister Starmer that the U.S. and the U.K. are working on a trade deal.
  • Japan's February Tokyo CPI was up 2.9% yr/yr (last 3.4%) and Core CPI was up 2.2% (expected 2.3%; last 2.5%). January Industrial Production fell 1.1% m/m (expected -1.0%; last -0.2%). January Retail Sales rose 3.9% yr/yr (expected 3.9%; last 3.5%) and January Housing Starts were down 4.6% yr/yr (expected -2.6%; last -2.5%).
  • Australia's January Housing Credit was up 0.4% m/m (last 0.5%).
  • India's Q3 GDP Quarterly was up 6.2% yr/yr (expected 6.3%; last 5.4%) and GDP Annual was up 6.5% (expected 6.4%; last 8.2%).
  • UK's February Nationwide HPI was up 0.4% m/m (expected 0.2%; last 0.1%), rising 3.9% yr/yr (expected 3.4%; last 4.1%).
  • Germany's January Retail Sales were up 0.2% m/m (expected 0.4%; last -0.9%), rising 2.9% yr/yr (last 2.0%); January Import Price Index was up 1.1% m/m (expected 0.7%; last 0.4%), rising 3.1% yr/yr (expected 2.7%; last 2.0%); February Unemployment Rate remained at 6.2% (expected 6.2%) and February Unemployment increased by 5,000 (expected 14,000; last 11,000). Flash February CPI was up 0.4% m/m, as expected (last -0.2%), rising 2.3% yr/yr, as expected (last 2.3%).
  • France's February CPI was up 0.2% m/m (expected 0.5%; last 0.2%), rising 0.8% yr/yr (expected 1.0%; last 1.7%); January Consumer Spending was down 0.5% (expected -0.6%; last 0.7%). Q4 GDP contracted 0.1% qtr/qtr (expected -0.1%; last 0.4%) but was up 0.6% yr/yr (expected 0.7%; last 1.2%). February HICP was unchanged m/m (expected 0.3%; last -0.2%), rising 0.9% yr/yr (expected 1.2%; last 1.8%). Q4 nonfarm payrolls were down 0.3% qtr/qtr (expected -0.2%; last 0.1%).
  • Italy's February CPI was up 0.2% m/m (expected 0.2%; last 0.6%), rising 1.7% yr/yr (expected 1.7%; last 1.5%); February HICP was up 0.1% m/m (expected 0.1%; last -0.8%), rising 1.7% yr/yr (expected 1.8%; last 1.7%).
• Commodities:
  • WTI Crude: -1.4% to $69.35/bbl
  • Gold: -0.9% to $2869.40/ozt
  • Copper: -1.2% to $4.563/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0405
  • GBP/USD: -0.1% to 1.2594
  • USD/CNH: -0.2% to 7.2875
  • USD/JPY: +0.6% to 150.64
• Data out Today:
  • 8:30 ET: January Personal Income (Briefing.com consensus 0.3%; prior 0.4%), Personal Spending (Briefing.com consensus 0.2%; prior 0.7%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.3%; prior 0.2%), advance January International Goods trade balance (prior -$122.1 bln), advance Retail Inventories (prior -0.3%), and advance Wholesale Inventories (prior -0.5%)
  • 9:45 ET: February Chicago PMI (Briefing.com consensus 41.2; prior 39.5)