Bond Market Update

Long End Leads Continued Weakness

• U.S. Treasuries are on track for a lower start with longer tenors expected to continue their recent show of relative weakness. Shortly after yesterday's cash close, President Trump officially announced a 25% tariff on all car and light truck imports into the United States, but he also said that reciprocal tariffs will be "lenient." Treasury futures spent the early portion of the night in a sideway range, but slid to lows during the European session alongside a mixed showing from other sovereign debt. The overnight news and data flow was on the light side while the U.S. session will see the release of Q4 GDP -- third estimate (Briefing.com consensus 2.3%; prior 2.3%) at 8:30 ET. Later in the day, the U.S. Treasury will complete this week's mixed slate of note offerings with a $44 bln 7-yr note sale. Crude oil holds a modest loss while the U.S. Dollar Index is down 0.1% at 104.40.
• Yield Check:
  • 2-yr: +1 bp to 4.02%
  • 3-yr: +3 bps to 4.03%
  • 5-yr: +5 bps to 4.13%
  • 10-yr: +5 bps to 4.39%
  • 30-yr: +6 bps to 4.74%

• News:
  • Canada's Prime Minister Carney said that his country will respond to U.S. auto tariffs soon.
  • China's Premier Li cautioned against "rising instability" in global markets.
  • Reserve Bank of Australia Assistant Governor Hunter shared a cautious view regarding additional rate cuts.
  • European Central Bank policymaker Kazaks spoke in favor of additional rate cuts if current conditions persist.
  • LVMH CEO Arnault expressed confidence in the region's potential for resilience.
  • China's February Industrial Profit was down 0.3% YTD (last -3.3%).
  • Eurozone's February PPI was up 0.4% m/m (last 0.5%), rising 1.0% yr/yr (last 1.1%). February M3 Money Supply was up 4.0% yr/yr (expected 3.8%; last 3.6%), February Private Sector Loans rose 1.5% yr/yr (expected 1.4%; last 1.3%), and February loans to nonfinancials rose 2.2% (last 2.0%).
  • Spain's February Retail Sales were up 3.6% yr/yr (last 2.3%).
• Commodities:
  • WTI Crude: -0.3% to $69.47/bbl 
  • Gold: +1.3% to $3060.20/ozt
  • Copper: -0.3% to $5.227/lb
• Currencies:
  • EUR/USD: +0.5% to 1.0786
  • GBP/USD: +0.4% to 1.2932
  • USD/CNH: UNCH at 7.2740
  • USD/JPY: +0.3% to 150.98
• Data out Today:
  • 8:30 ET: Q4 GDP -- third estimate (Briefing.com consensus 2.3%; prior 2.3%), Q4 GDP Deflator -- third estimate (Briefing.com consensus 2.4%; prior 2.4%), Weekly Initial Claims (Briefing.com consensus 225,000; prior 223,000), Continuing Claims (prior 1.892 mln), advance February goods trade balance (prior -$153.3 bln), advance February Retail Inventories (prior -0.1%), and advance February Wholesale Inventories (prior 0.7%)
  • 10:00 ET: February Pending Home Sales (Briefing.com consensus 2.9%; prior -4.6%)
  • 10:30 ET: Weekly natural gas inventories (prior +9 bcf)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results