Bond Market Update

Lower Start Ahead

• U.S. Treasuries are on track for a lower start after a steady overnight retreat in the Treasury futures market. The overnight selling took place even though Japanese and Chinese bonds climbed, with the latter advancing after the release of underwhelming February social financing data from China. In Europe, tariffs remain at the forefront of the conversation and there is some ongoing uncertainty about the formation of the next ruling coalition in Germany. Economic data during the U.S. session will be limited to the 10:00 ET release of the preliminary University of Michigan Consumer Sentiment (Briefing.com consensus 65.6; prior 64.7) Index for March. In Washington, there is still some uncertainty about a potential government shutdown going into the weekend, though Senate Minority Leader Schumer indicated that he will vote for the spending bill proposed by the GOP. Crude oil is on the rise while the U.S. Dollar Index is down 0.1% at 103.69.
• Yield Check:
  • 2-yr: +3 bps to 3.98%
  • 3-yr: +3 bps to 3.97%
  • 5-yr: +3 bps to 4.06%
  • 10-yr: +3 bps to 4.30%
  • 30-yr: +3 bps to 4.63%
• News:
  • The People's Bank of China reiterated its moderately loose stance of monetary policy, adding that sound monetary conditions will be created for the economy.
  • South Korea's trade minister is visiting the U.S. to discuss tariffs and cooperation.
  • The leader of Germany's Green party said that he does not trust CDU leader Merz, who is likely to be Germany's next chancellor.
  • China's February New Loans reached CNY1.01 trln (expected CNY2.15 trln; last CNY5.13 trln). February outstanding loans grew 7.3% yr/yr (expected 7.4%; last 7.5%) and February total social financing reached CNY2.23 trln (expected CNY2.50 trln; last CNY5.13 trln).
  • South Korea's February Import Pirce Index was up 4.6% yr/yr (last 6.6%) and Export Price Index was up 6.3% yr/yr (last 8.5%).
  • New Zealand's February Business PMI hit 53.9 (last 51.4) and February FPI was down 0.5% m/m (last 1.9%).
  • Germany's February CPI was up 0.4% m/m, as expected (last -0.2%), rising 2.3% yr/yr, as expected (last 2.3%).
  • U.K.'s January GDP contracted 0.1% m/m (expected 0.1%; last 0.4%) but was up 1.0% yr/yr (expected 1.2%; last 1.5%). January Construction Output was down 0.2% m/m (expected -0.1%; last -0.2%). rising 0.2% yr/yr (expected 0.4%; last 1.5%). January Industrial Production was down 0.9% m/m (expected -0.1%; last 0.0%), falling 1.1% yr/yr (expected -0.4%; last -1.4%). Inflation Expectations rose to 3.4% from 3.0%.
  • France's February CPI was unchanged m/m (expected 0.2%; last 0.1%), rising 0.8% yr/yr, as expected (last 1.7%).
  • Italy's January Industrial Production was up 3.2% m/m (expected 1.5%; last -2.7%) but down 0.6% yr/yr (last -6.9%).
  • Spain's February CPI was up 0.4% m/m, as expected (last 0.2%), rising 3.0% yr/yr, as expected (last 2.9%). February Core CPI was up 2.2% yr/yr (expected 2.1%; last 2.4%).
• Commodities:
  • WTI Crude: +0.8% to $67.08/bbl
  • Gold: +0.6% to $3008.80/ozt
  • Copper: +0.3% to $4.941/lb
• Currencies:
  • EUR/USD: +0.4% to 1.0893
  • GBP/USD: -0.1% to 1.2938
  • USD/CNH: -0.1% to 7.2352
  • USD/JPY: +0.7% to 148.76
• Data out Today:
  • 10:00 ET: Preliminary March University of Michigan Consumer Sentiment (Briefing.com consensus 65.6; prior 64.7)