Bond Market Update

Quiet Start Ahead

• U.S. Treasuries are on track for a slightly higher start in shorter tenors while the long end is expected to show some relative weakness after outperforming yesterday. Treasury futures climbed during the early portion of the Asian session, but the gains began fading once the focus turned to action in Europe. Global equity markets advanced with Hong Kong's Hang Seng (+2.5%) reaching its best level since early 2022. Economic data released overnight showed some improvement in the sentiment in the eurozone, although not as much as the market had expected. In the U.S., there is some hope that the Trump administration will present a simplified reciprocal tariff plan for the start of April. Today's economic data will include February Housing Starts (Briefing.com consensus 1.385 mln; prior 1.366 mln) at 8:30 ET and the U.S. Treasury will hold a $13 bln 20-yr bond reopening later in the day. Crude oil is on the rise while the U.S. Dollar Index is little changed at 103.37.
• Yield Check:
  • 2-yr: UNCH at 4.05%
  • 3-yr: UNCH at 4.03%
  • 5-yr: UNCH at 4.10%
  • 10-yr: +1 bp to 4.32%
  • 30-yr: +2 bps to 4.62%

• News:
  • President Trump said that China's President Xi will visit in the near future.
  • The Bank of Japan will meet overnight but a rate hike is not expected at this time.
  • Japanese brokerages outperformed after Berkshire Hathaway increased its stake in the group.
  • Germany's parliament will vote on a reform of debt rules later today.
  • Bank of America reported that investors are cutting U.S. equity exposure at record levels, reallocating to eurozone stocks.
  • Japan's January Tertiary Industry Activity Index fell to -10.0 from 7.4. 
  • Hong Kong's February Unemployment Rate rose to 3.2% from 3.1%.
  • Eurozone's March ZEW Economic Sentiment rose to 39.8 from 24.2 (expected 43.6). January trade surplus reached EUR1.0 bln (expected surplus of EUR14.0 bln; last surplus of EUR15.4 bln).
  • Germany's March ZEW Economic Sentiment rose to 51.6 from 26.0 (expected 48.1) and ZEW Current Conditions ticked up to -87.6 from -88.5 (expected -80.5).
  • Italy's January trade deficit reached EUR264 mln (expected surplus of EUR5.15 bln; last surplus of EUR5.82 bln).
  • Spain's January trade deficit reached EUR6.19 bln (last deficit of EUR4.12 bln).
• Commodities:
  • WTI Crude: +1.2% to $68.40/bbl
  • Gold: +1.0% to $3035.90/ozt
  • Copper: +0.4% to $4.979/lb
• Currencies:
  • EUR/USD: UNCH at 1.0918
  • GBP/USD: -0.1% to 1.2969
  • USD/CNH: UNCH at 7.2292
  • USD/JPY: +0.4% to 149.75
• Data out Today:
  • 8:30 ET: February Housing Starts (Briefing.com consensus 1.385 mln; prior 1.366 mln), Building Permits (Briefing.com consensus 1.450 mln; prior 1.483 mln), February Import Prices (prior 0.3%), Import Prices ex-oil (prior 0.1%), Export Prices (prior 1.3%), and Export Prices ex-agriculture (prior 1.5%)
  • 9:15 ET: February Industrial Production (Briefing.com consensus 0.2%; prior 0.5%) and Capacity Utilization (Briefing.com consensus 77.7%; prior 77.8%)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results