Bond Market Update

Trimming Last Week's Losses

• U.S. Treasuries are on track for a higher start after last week's retreat. Treasury futures climbed at the start of the overnight session, adding to their gains as the night went on. The advance followed the release of cooler-than-expected CPI (-0.7% yr/yr; expected -0.4%) and PPI (-2.2% yr/yr; expected -2.0%) reports from China and comments from President Trump, who said on Sunday that the economy faces a "transition" period. Besides the inflation reports from China, the market received a smaller-than-expected January trade surplus from Germany (EUR16.0 bln; expected EUR21.0 bln) while the country's Industrial Production (2.0%; expected 1.6%) surprised to the upside. The U.S. session, however, will not feature any data. Crude oil is building on Friday's advance while the U.S. Dollar Index is down 0.1% at 103.72.
• Yield Check:
  • 2-yr: -5 bps to 3.95%
  • 3-yr: -6 bps to 3.95%
  • 5-yr: -7 bps to 4.02%
  • 10-yr: -8 bps to 4.24%
  • 30-yr: -7 bps to 4.55%

• News:
  • Mark Carney will be Canada's next prime minister.
  • There was growing speculation that the Bank of Japan will refrain from a rate hike in March as it observes the impact of the January hike.
  • Australia's Prime Minister Albanese announced that national elections will be held in May.
  • There is some speculation that the European Central Bank will pause its cutting campaign after policymaker Schnabel expressed some concerns about inflation.
  • Germany's CDU and SPD are moving closer to forming a ruling coalition.
  • China's February CPI was down 0.2% m/m (expected -0.1%; last 0.7%), falling 0.7% yr/yr (expected -0.4%; last 0.5%). February PPI was down 2.2% yr/yr (expected -2.0%; last -2.3%).
  • Japan's January Overall Wage Income was up 2.8% yr/yr (expected 3.2%; last 4.4%). January Current Account surplus reached JPY1.94 trln (expected surplus of JPY1.97 trln; last surplus of JPY2.73 trln). January Leading Index rose to 108.0 from 107.9 (expected 108.1) and Coincident Indicator was up 0.1% m/m (last 1.0%). February Economy Watchers Current Index fell to 45.6 from 48.6 (expected 48.5).
  • Eurozone's March Sentix Investor Confidence rose to -2.9 from -12.7 (expected -9.1).
  • Germany's January trade surplus reached EUR16.0 bln (expected surplus of EUR21.0 bln; last surplus of EUR20.7 bln) as imports rose 1.2% m/m (last 1.6%) and exports fell 2.5% m/m (last 2.5%). January Industrial Production was up 2.0% m/m (expected 1.6%; last -1.5%) but down 1.5% yr/yr (last -2.3%).
  • Italy's January PPI was up 1.6% m/m (last 0.6%), rising 4.4% yr/yr (last 1.1%).
  • Swiss February SECO Consumer Climate fell to -34 from -21 (expected -28).
• Commodities:
  • WTI Crude: +0.5% to $67.37/bbl
  • Gold: -0.4% to $2904.10/ozt
  • Copper: -0.7% to $4.678/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0856
  • GBP/USD: +0.1% to 1.2927
  • USD/CNH: +0.2% to 7.2588
  • USD/JPY: -0.6% to 147.12
• No Data on Today's Schedule