Bond Market Update

Focus Turns to FOMC

• U.S. Treasuries are on track for a modestly lower start after a rangebound night in the futures market. Treasury futures inched lower in early evening action but recovered the bulk of their losses during a bounce that took place once the focus shifted to Europe. Before then, the Bank of Japan voted 9-0 to leave its policy rate unchanged at 0.50%, though that decision was widely expected. Elsewhere, eurozone's final CPI report for February showed slightly cooler-than-expected price growth. The U.S. session will not feature any top tier data, but the Federal Open Market Committee will release its latest policy statement at 14:00 ET, followed by Fed Chairman Powell's press conference at 14:30 ET. The market is not expecting a rate cut today, but it will be eager to see if policymakers hint at potential cuts in the summer. Crude oil holds a modest loss while the U.S. Dollar Index is up 0.4% at 103.62.
• Yield Check:
  • 2-yr: +1 bp to 4.05%
  • 3-yr: +2 bps to 4.03%
  • 5-yr: +2 bps to 4.09%
  • 10-yr: +1 bp to 4.29%
  • 30-yr: +1 bp to 4.59%

• News:
  • China's President Xi is reportedly angry that CK Hutchinson did not discuss its sale of Panama Canal assets to BlackRock with the government.
  • Bank Indonesia took steps to stabilize the rupiah after a volatile Tuesday in the country's equity market.
  • Euronext plans to consolidate over 3,300 exchange-traded product listings onto a single exchange, aiming to reduce market fragmentation and lower trading costs for retail investors.
  • British Chancellor Reeves will reportedly announce additional public spending cuts next week.
  • Japan's February trade surplus reached JPY584.5 bln (expected JPY722.8 bln; last deficit of JPY2.736.6 trln) as imports fell 0.7% yr/yr (expected 0.1%; last 16.2%) and exports rose 11.4% yr/yr (expected 12.1%; last 7.3%). January Core Machinery Orders were down 3.5% m/m (expected -0.1%; last -0.8%) but up 4.4% yr/yr (expected 6.9%; last 4.3%). March Reuters Tankan Index fell to -1 from 3. January Industrial Production was down 1.1% m/m, as expected (last -0.3%) and Capacity Utilization rose 4.5% m/m (last 0.1%).
  • Singapore's Q4 Unemployment Rate remained at 1.9%, as expected.
  • Australia's February MI Leading Index was up 0.1% m/m (last 0.1%).
  • New Zealand's Q1 Westpac Consumer Sentiment fell to 89.2 from 97.5. Q4 Current Account deficit reached NZD7.04 bln (expected deficit of NZD6.68 bln; last deficit of NZD10.58 bln).
  • Eurozone's February CPI was up 0.4% m/m (expected 0.5%; last -0.3%), rising 2.3% yr/yr (expected 2.4%; last 2.5%). February Core CPI was up 0.5% m/m (expected 0.6%; last -0.9%), rising 2.6% yr/yr, as expected (last 2.7%). Q4 Wages were up 4.1% yr/yr (last 4.3%) and Q4 Labor Cost Index was up 3.7% yr/yr (last 4.5%).
• Commodities:
  • WTI Crude: -0.1% to $66.83/bbl
  • Gold: +0.2% to $3046.90/ozt
  • Copper: +0.7% to $5.05/lb
• Currencies:
  • EUR/USD: -0.3% to 1.0910
  • GBP/USD: -0.2% to 1.2979
  • USD/CNH: +0.1% to 7.2339
  • USD/JPY: +0.4% to 149.81
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -6.2%; prior 11.2%)
  • 10:30 ET: Weekly crude oil inventories (prior +1.45 mln)
  • 14:00 ET: March FOMC Rate Decision (Briefing.com consensus 4.25-4.50%; prior 4.25-4.50%)
  • 16:00 ET: January Net Long-Term TIC Flows (prior $72.0 bln)