Bond Market Update

Long End Lags Again

• U.S. Treasuries are on track for a lower start with longer tenors expected to show early relative weakness again. Treasury futures began dipping shortly after yesterday's cash close, remaining pressured into the night. The market bounced briefly once the focus shifted to Europe, but that move has given way to a return to overnight lows. Overnight trade featured ongoing focus on tariffs that are scheduled to go into effect next week and ongoing hope that some countries may still receive exemptions. In Europe, British Chancellor Reeves is expected to announce additional cuts to benefits in order to plug a budget gap. The U.S. session will feature the release of February Durable Orders (Briefing.com consensus -1.2%; prior 3.1%) at 8:30 ET and the U.S. Treasury will follow yesterday's solid 2-yr note sale with a $70 bln 5-yr note offering. Crude oil is on the rise while the U.S. Dollar Index is up 0.1% at 104.25.
• Yield Check:
  • 2-yr: +1 bp to 4.01%
  • 3-yr: +3 bps to 4.01%
  • 5-yr: +3 bps to 4.09%
  • 10-yr: +3 bps to 4.34%
  • 30-yr: +3 bps to 4.69%

• News:
  • Bank of Japan Governor Ueda continued hinting at potential rate hikes if inflation aligns with forecasts, according to Nikkei.
  • The Chief Executive of the Hong Kong Monetary Authority highlighted the potential for significant Chinese capital inflows into Hong Kong, emphasizing opportunities for the city's financial markets in the coming years.
  • European Central Bank President Christine Lagarde emphasized resilience, stating, "Europe must prepare for any trade shocks," boosting defense stocks like Rheinmetall.
  • Goldman Sachs analysts told The New York Times that "European earnings could face pressure" if trade tensions persist, tempering broader optimism.
  • Japan's January Corporate Services Price Index was up 3.0% yr/yr (expected 3.1%; last 3.2%). January Leading Index remained at 108.3 (expected 108.0) and Coincident Indicator ticked up 0.1% m/m, as expected (last 1.0%).
  • South Korea's March BSI Manufacturing Index rose to 68 from 65.
  • Singapore's February Industrial Production was down 7.5% m/m (expected -0.3%; last 2.8%), falling 1.3% yr/yr (expected 7.5%; last 8.0%).
  • Australia's February Monthly CPI Indicator was up 2.4% yr/yr (expected 2.5%; last 2.5%).
  • U.K.'s February CPI was up 0.4% m/m (expected 0.5%; last -0.1%), rising 2.8% yr/yr (expected 3.0%; last 3.0%). February Core CPI was up 0.4% m/m (expected 0.5%; last -0.4%), rising 3.5% yr/yr (expected 3.6%; last 3.7%). February House Price Index was up 4.9% yr/yr (expected 4.4%; last 4.6%).
  • France's March Consumer Confidence fell to 92 from 93 (expected 94).
  • Spain's Q4 GDP expanded 0.8% qtr/qtr, as expected (last 0.8%), growing 3.4% yr/yr (expected 3.5%; last 3.5%).
  • Swiss March ZEW Expectations fell to -10.7 from 3.4.
• Commodities:
  • WTI Crude: +0.9% to $69.61/bbl
  • Gold: +0.3% to $3034.50/ozt
  • Copper: +1.4% to $5.285/lb
• Currencies:
  • EUR/USD: UNCH at 1.0795
  • GBP/USD: -0.3% to 1.2904
  • USD/CNH: +0.2% to 7.2768
  • USD/JPY: +0.3% to 150.23
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -2.0%; prior -6.2%)
  • 8:30 ET: February Durable Orders (Briefing.com consensus -1.2%; prior 3.1%) and Durable Orders ex-transport (Briefing.com consensus 0.1%; prior 0.0%)
  • 10:30 ET: Weekly crude oil inventories (prior +1.75 mln)
• Treasury Auctions:
  • 13:00 ET: $70 bln 5-yr Treasury note auction results