Bond Market Update

Higher Start Ahead

• U.S. Treasuries are on track for a higher start after a couple days of intraday resilience from shorter tenors. Treasury futures climbed steadily through the Asian session, reaching their best levels shortly after the focus turned to action in Europe. The push to highs was followed by a pullback but the past couple hours have seen a renewed push toward overnight highs. Overall investor sentiment has remained dampened by the uncertainty related to incoming tariffs with the April 2 implementation date looming early next week. The market received a big batch of data from Europe, including cooler-than-expected flash March CPI from France (0.2%; expected 0.3%). The U.S. session will feature the release of the Personal Income/Outlays report for February, which will factor into the market's rate expectations. The fed funds futures market is currently looking at June as the likely time for the announcement of the next rate cut. Crude oil is little changed while the U.S. Dollar Index is up 0.1% at 104.47.
• Yield Check:
  • 2-yr: -2 bps to 3.98%
  • 3-yr: -2 bps to 3.98%
  • 5-yr: -3 bps to 4.07%
  • 10-yr: -4 bps to 4.33%
  • 30-yr: -5 bps to 4.68%

• News:
  • Japan's Prime Minister Ishiba floated a plan to offer liquidity support to companies impacted by tariffs.
  • The Bank of Japan's summary of opinions from its March meeting showed that the central bank will need to downshift its accommodative stance to a neutral one.
  • Reserve Bank of Australia Governor Bullock warned against premature easing.
  • European Central Bank policymaker De Guindos spoke favorably about inflation returning to target while Bank of England Governor Bailey said that inflation risks in the U.K. remain elevated.
  • Japan's March Tokyo CPI was up 2.9% m/m (last 2.8%) and Tokyo Core CPI was up 2.4% yr/yr (expected 2.2%; last 2.2%).
  • Singapore's February Bank Lending reached SGD841.1 bln (last SGD836.3 bln).
  • Eurozone's March Business and Consumer Survey fell to 95.2 from 96.3 (expected 97.0).
  • Germany's April GfK Consumer Climate ticked up to -24.5 from -24.6 (expected -22.6). March Unemployment increased by 26,000 (expected 10,000; last 9,000) and March Unemployment Rate rose to 6.3% from 6.2% (expected 6.2%).
  • U.K.'s Q4 GDP was up 0.1% qtr/qtr, as expected (last 0.0%), growing 1.5% yr/yr (expected 1.4%; last 0.9%). Q4 Business Investment was up 1.8% yr/yr (expected -0.7%; last 5.6%). February Retail Sales rose 1.0% m/m (expected -0.5%; last 1.6%), increasing 2.2% yr/yr (expected 0.5%: last 0.6%). February Core Retail Sales were up 1.0% m/m (expected -0.5%; last 1.6%), rising 2.2% yr/yr (expected 0.4%; last 0.8%). January trade deficit reached GBP17.85 bln (expected deficit of GBP16.8 bln; last deficit of GBP19.7 bln).
  • France's flash March CPI was up 0.2% m/m (expected 0.3%; last 0.0%), rising 0.8% yr/yr (last 0.8%). February PPI was down 0.5% m/m (last 0.8%), falling 1.4% yr/yr (last -2.2%). February Consumer Spending was down 0.1% m/m (expected 0.3%; last -0.6%).
  • Italy's March Business Confidence fell to 86.0 from 86.9 (expected 87.5) and Consumer Confidence fell to 95.0 from 98.8. January Industrial Sales were up 3.8% m/m (last -2.7%), rising 1.7% yr/yr (last -7.2%).
  • Spain's March CPI was up 0.1% m/m (last 0.4%), rising 2.3% yr/yr (expected 2.6%; last 3.0%). March Core CPI was up 2.0% yr/yr (last 2.2%).
  • Swiss March KOF Leading Indicators rose to 103.9 from 102.6 (expected 102.5).
• Commodities:
  • WTI Crude: UNCH at $69.90/bbl
  • Gold: +0.8% to $3084.60/ozt
  • Copper: UNCH at $5.118/lb
• Currencies:
  • EUR/USD: -0.2% to 1.0772
  • GBP/USD: -0.2% to 1.2929
  • USD/CNH: +0.1% to 7.2753
  • USD/JPY: -0.2% to 150.80
• Data out Today:
  • 8:30 ET: February Personal Income (Briefing.com consensus 0.4%; prior 0.9%), Personal Spending (Briefing.com consensus 0.6%; prior -0.2%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.4%; prior 0.3%)
  • 10:00 ET: Final March University of Michigan Consumer Sentiment (Briefing.com consensus 57.9; prior 57.9)