Bond Market Update

Monday Rally Sustained

• U.S. Treasuries are on track for a higher start with the short end set to lead the early advance after underperforming on Monday. Treasury futures faced some pressure during the first half of the overnight session, reaching lows shortly before the focus turned to action in Europe. There has been some pressure on overall risk appetite, resulting in equity losses in Asia and Europe while U.S. equity futures also point to a lower start on Wall Street. Tariffs on imports from Canada and Mexico go into effect today, as well as an additional tariff on imports from China. In response, China will impose tariffs between 10 and 15% on some imports from the U.S. and place additional American companies on its export control list early next week. Crude oi is falling toward its 2024 low (65.27) while the U.S. Dollar Index is down 0.8% at 105.93, reaching its lowest level since early December.
• Yield Check:
  • 2-yr: -7 bps to 3.91%
  • 3-yr: -7 bps to 3.89%
  • 5-yr: -5 bps to 3.94%
  • 10-yr: -3 bps to 4.15%
  • 30-yr: UNCH at 4.46%

• News:
  • OPEC+ plans to gradually increase its output on April 1, but it reserves the right to change its plan if there is a significant shift in market conditions.
  • Japan's Prime Minister Ishiba and Finance Minister Kato pushed back against President Trump's suggestion that Japan is looking to devalue its currency intentionally.
  • The latest policy Minutes from the Reserve Bank of Australia cautioned against expectations for additional rate cuts since the return to target inflation is uncertain.
  • European Commission President von der Leyen proposed that the EU borrow EUR150 bln as part of an EUR800 bln military expenditure fund.
  • Japan's January Unemployment Rate rose to 2.5% from 2.4% (expected 2.4%) and jobs/applications ratio rose to 1.26 from 1.25 (expected 1.25). Q4 Capital Spending was down 0.2% yr/yr (expected 4.9%; last 8.1%). February Monetary Base was down 1.9% yr/yr (expected -0.5%; last -0.7%). February Household Confidence dipped to 35.0 from 35.2 (expected 35.2).
  • South Korea's January Industrial Production was down 2.3% m/m (expected -3.1%; last 3.9%), falling 4.1% yr/yr (expected -2.0%; last 4.4%). January Retail Sales were down 0.6% m/m (last 0.2%) and January Service Sector Output was down 0.8% m/m (last 1.1%). February Manufacturing PMI hit 49.9 (last 50.3).
  • Australia's Q4 Current Account deficit reached AUD12.5 bln (expected deficit of AUD11.8 bln; last deficit of AUD13.9 bln). Q4 Net Exports Contribution was up 0.2% (expected -0.1%; last 0.1%). January Retail Sales rose 0.3% m/m, as expected (last -0.1%).
  • New Zealand's January Building Consents increased 2.6% m/m (last -5.6%).
  • Eurozone's January Unemployment Rate remained at 6.2% (expected 6.3%).
  • France's January government budget deficit reached EUR17.3 bln (last deficit of EUR156.3 bln).
  • Italy's January Unemployment Rate dipped to 6.3% from 6.4% (expected 6.2%).
  • Spain's February Unemployment decreased by 6,000 (expected 45,200; last 38,700).
• Commodities:
  • WTI Crude: -1.9% to $67.11/bbl
  • Gold: +1.2% to $2934.10/ozt
  • Copper: -1.0% to $4.56/lb
• Currencies:
  • EUR/USD: +0.7% to 1.0554
  • GBP/USD: +0.4% to 1.2747
  • USD/CNH: -0.6% to 7.2593
  • USD/JPY: -0.9% to 148.19
• No Data on Today's Schedule