Bond Market Update

Boosted by Brief Tariff Reprieve

• U.S. Treasuries are on track for a higher start with shorter tenors leading the early advance after weekend reports indicated that President Trump exempted items like smartphones, semiconductors, and some other electronics from reciprocal tariffs. The initial excitement was moderated after Commerce Secretary Lutnick said that the exemptions will be temporary while President Trump added that he will soon announce a tariff rate for semiconductors. Economic data released overnight included a larger-than-expected China's trade surplus for March thanks to strong export growth, likely due to accelerated shipments to get ahead of new tariffs. Global equities, including European issues, are having a positive start to the week even though Goldman Sachs downgraded its view of European stocks due to increased uncertainty and a weaker earnings outlook. The market will not receive any data today, leaving the focus on potential headline risk. Crude oil is on the rise while the U.S. Dollar Index is down 0.7% at 99.41.
• Yield Check:
  • 2-yr: -4 bps to 3.91%
  • 3-yr: -6 bps to 3.94%
  • 5-yr: -8 bps to 4.08%
  • 10-yr: -6 bps to 4.43%
  • 30-yr: -4 bps to 4.84%

• News:
  • Goldman Sachs (GS) beat Q1 expectations by a healthy margin.
  • Shanghai Securities News speculated that China will announce additional monetary easing measures soon.
  • Italy's Prime Minister Meloni is scheduled to meet with President Trump in Washington on Wednesday.
  • Standard & Poor's upgraded Italy's debt rating to BBB+ from BBB due to improved economic buffers and a falling deficit.
  • China's March New Loans reached CNY3.64 trln (expected CNY3.02 trln; last CNY1.01 trln). March Outstanding Loans grew 7.4% yr/yr (expected 7.3%; last 7.3%) and March total social financing reached CNY5.89 trln (expected CNY4.80 trln; last CNY2.23 trln). March trade surplus reached $102.64 bln (expected $74.30 bln; last $170.52 bln) as imports fell 4.3% yr/yr (expected -2.0%; last -8.4%) and exports rose 12.4% yr/yr (expected 4.4%; last 2.3%).
  • Japan's February Industrial Production was up 2.3% m/m (expected 2.5%; last -1.1%) and Capacity Utilization was down 1.1% m/m (last 4.5%).
  • Singapore's Q1 GDP contracted 0.8% qtr/qtr (expected -0.4%; last 2.0%) but was up 3.8% yr/yr (expected 4.2%; last 5.0%).
  • New Zealand's March Electronic Card Retail Sales were down 0.8% m/m (last 0.3%), falling 1.6% yr/yr (last -4.2%).
  • Swiss March PPI was up 0.1% m/m (expected 0.2%; last 0.3%) but down 0.1% yr/yr (last -0.1%).
• Commodities:
  • WTI Crude: +1.4% to $62.33/bbl 
  • Gold: -0.2% to $3238.70/ozt
  • Copper: +1.9% to $4.611/lb
• Currencies:
  • EUR/USD: +0.4% to 1.1402
  • GBP/USD: +0.9% to 1.3198
  • USD/CNH: +0.5% to 7.3116
  • USD/JPY: -0.3% to 143.02
• No Data on Today's Schedule