Bond Market Update

Long End Remains Pressured

• U.S. Treasuries are on track to begin the Friday session with losses in longer tenors after overnight weakness in the futures market pressured action toward lows from this week. Treasury futures reached lows at the start of the Asian session, followed by a slow recovery as the night went on. China announced that its tariff on imports from the U.S. will be raised to 125% after President Trump increased the tariff on imports from China to 145%. On a related note, China's President Xi is scheduled to visit Vietnam, Malaysia, and Cambodia between April 14 and 18, looking to discourage these nations from making trade deals with the U.S. In Europe, European Central Bank President Lagarde highlighted Europe's vulnerability due to reliance on U.S. and Chinese payment systems, calling for stronger European alternatives amidst the geopolitical friction. She also said that the central bank is ready to use its policy instruments, if needed. The U.S. session will feature the release of March PPI (Briefing.com consensus 0.1%; prior 0.0%) and Core PPI (Briefing.com consensus 0.3%; prior -0.1%) at 8:30 ET. Crude oil is little changed near $60/bbl while the U.S. Dollar Index is down 1.1% at 99.75.
• Yield Check:
  • 2-yr: -1 bp to 3.84%
  • 3-yr: +2 bps to 3.90%
  • 5-yr: +2 bps to 4.06%
  • 10-yr: +4 bps to 4.43%
  • 30-yr: +2 bps to 4.87%

• News:
  • JPMorgan Chase (JPM) beat Q1 expectations by a solid margin. CEO Dimon observed that the economy is facing considerable turbulence, including geopolitics, and acknowledged that asset prices are still rather high.
  • Philippines Central Bank lowered its policy rate by 25 basis points to 5.50%, as expected.
  • The EU will negotiate the removal of tariffs on imports of Chinese electric vehicles.
  • Japan's March M2 Money Stock was up 0.8% yr/yr (expected 1.2%; last 1.2%).
  • India's February Industrial Production rose 2.9% yr/yr (expected 4.0%; last 5.2%) and February Manufacturing Output rose 2.9% m/m (last 5.8%).
  • New Zealand's March Business NZ PMI hit 53.2 (last 54.1).
  • Germany's final March CPI was up 0.3% m/m, as expected (last 0.4%), rising 2.2% yr/yr, as expected (last 2.3%).
  • U.K.'s February GDP was up 0.5% m/m (expected 0.1%; last 0.0%), rising 1.4% yr/yr (expected 0.9%; last 1.2%). February Construction Output was up 0.4% m/m (expected 0.2%; last -0.3%), rising 1.6% yr/yr, as expected (last 0.0%). February Industrial Production rose 1.5% m/m (expected 0.1%; last -0.5%), inching up 0.1% yr/yr (expected -2.3%; last -0.5%). February Manufacturing Production grew 2.2% m/m (expected 0.2%; last -1.0%), rising 0.3% yr/yr (expected -2.4%; last -0.9%). February trade deficit reached GBP20.81 bln (expected deficit of GBP17.30 bln; last deficit of GBP18.22 bln).
  • Spain's final March CPI was up 0.1% m/m, as expected (last 0.4%), rising 2.3% yr/yr, as expected (last 3.0%).
  • Swiss SECO Consumer Climate fell to -35 from -34 (expected -32).
• Commodities:
  • WTI Crude: -0.2% to $59.95/bbl
  • Gold: +1.7% to $3231.60/ozt 
  • Copper: +2.9% to $4.459/lb
• Currencies:
  • EUR/USD: +1.4% to 1.1343
  • GBP/USD: +1.0% to 1.3091
  • USD/CNH: -0.1% to 7.3039
  • USD/JPY: -1.3% to 142.64
• Data out Today:
  • 8:30 ET: March PPI (Briefing.com consensus 0.1%; prior 0.0%) and Core PPI (Briefing.com consensus 0.3%; prior -0.1%)
  • 10:00 ET: Preliminary April University of Michigan Consumer Sentiment (Briefing.com consensus 54.8; prior 57.0)