Bond Market Update

 Inching Lower

• U.S. Treasuries are on track for a slightly lower start in the belly while other tenors are expected to begin close to their flat lines. Treasury futures climbed in early evening trade before giving back their gains and facing continued pressure as the night went on. The movement took place as risk sentiment stabilized a bit from recent volatility. Economic data released overnight included below-consensus Q4 GDP from Japan (0.6%; expected 0.7%) while the U.S. session will only see the JOLTS report for January. Earlier, the NFIB Small Business Optimism Index (100.7; prior 102.8) showed a decline in February, though the series remains well above levels seen before the presidential election. Crude oil is staging another bounce while the U.S. Dollar Index is down 0.4% at 103.52.
• Yield Check:
  • 2-yr: +1 bp to 3.91%
  • 3-yr: +1 bp to 3.91%
  • 5-yr: +2 bps to 3.99%
  • 10-yr: +2 bps to 4.23%
  • 30-yr: +1 bp to 4.55%

• News:
  • The Wall Street Journal reported that plans are being made for a June meeting between President Trump and China's President Xi.
  • A former Bank of Japan policymaker said that the rate hike is likely to take place in June.
  • South Korea's exports were up 2.9% yr/yr through the first ten days of March with chip exports showing no change yr/yr.
  • German politicians are hoping to formalize the recently-announced changes to military financing rules later this week.
  • Japan's Q4 GDP expanded 0.6% qtr/qtr (expected 0.7%; last 0.3%) while annualized GDP grew 2.2% qtr/qtr (last 1.2%). Q4 Capital Expenditure was up 0.6% qtr/qtr (expected 0.5%; last -0.1%), External Demand was up 0.7% qtr/qtr, as expected (last -0.2%), Private Consumption was unchanged qtr/qtr (expected 0.1%; last 0.7%), and GDP Price Index was up 2.9% yr/yr (expected 2.8%; last 2.4%). January Household Spending fell 4.5% m/m (expected -1.9%; last 2.3%) but was up 0.8% yr/yr (expected 3.7%; last 2.7%). February Machine Tool Orders rose 3.5% yr/yr (expected 4.7%; last 11.2%).
  • Australia's March Westpac Consumer Sentiment was up 4.0% (last 0.1%). February NAB Business Confidence fell to -1 from 5 and Business Survey rose to 4 from 3.
  • New Zealand's Q4 Manufacturing Sales Volume rose 1.1% qtr/qtr (last -0.9%).
• Commodities:
  • WTI Crude: +1.2% to $66.84/bbl
  • Gold: +0.7% to $2920.70/ozt
  • Copper: +2.2% to $4.768/lb
• Currencies:
  • EUR/USD: +0.6% to 1.0903
  • GBP/USD: +0.4% to 1.2924
  • USD/CNH: -0.4% to 7.2355
  • USD/JPY: +0.3% to 147.60
• Dataout Today:
  • 6:00 ET: February NFIB Small Business Optimism Index (actual 100.7; prior 102.8)
  • 10:00 ET: January job openings (prior 7.600 mln)
• TreasuryAuctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results