Bond Market Update

Steady Ahead of Data Storm

• U.S. Treasuries are on course to begin the day near their flat lines with the short end showing some relative strength while longer tenors are a step behind. Treasury futures saw very little movement last evening after the White House informed NVIDIA (NVDA) that it will need a license to export some of its chips to China, which is expected to cost the company about $5.5 bln in Q1. The news weighed on overall sentiment, pressuring tech-related stocks. Treasury futures reached highs during the early portion of the European session, but the slim gains were largely erased over the past three hours. A Japanese trade delegation is visiting Washington today and there are some signs that China is willing to negotiate with the White House, but it wants to have a clear main contact person in the U.S. Today's session will feature a full slate of data and a 20-yr bond reopening. In addition, Fed Chairman Powell will speak at a conference in Chicago at 13:30 ET. Crude oil is on the rise while the U.S. Dollar Index is down 0.6% at 99.60, giving back yesterday's gain.
• Yield Check:
  • 2-yr: -1 bp to 3.82%
  • 3-yr: -1 bp to 3.83%
  • 5-yr: UNCH at 3.96%
  • 10-yr: +1 bp to 4.33%
  • 30-yr: UNCH at 4.78%

• News:
  • China's National Bureau of Statistics acknowledged that the international environment is causing an unfavorable impact on the country's economy, but macro policies are expected to become more proactive in the coming months.
  • China named a new vice commerce minister and a new top trade negotiator.
  • The European Central Bank is widely expected to announce a 25-basis point rate cut tomorrow.
  • China's Q1 GDP expanded 1.2% qtr/qtr (expected 1.4%; last 1.6%), growing 5.4% yr/yr (expected 5.2%; last 5.4%). March House Prices were down 4.5% yr/yr (last 0.1%), March Fixed Asset Investment rose 4.2% yr/yr (expected 4.1%; last 4.1%), March Industrial Production grew 7.7% yr/yr (expected 5.9%; last 5.9%), and March Retail Sales increased 5.9% yr/yr (expected 4.2%; last 4.0%). March Unemployment Rate fell to 5.2% from 5.4% (expected 5.3%).
  • Japan's April Reuters Tankan Index rose to 9 from -1. February Core Machinery Orders were up 4.3% m/m (expected 1.1%; last -3.5%), rising 1.5% yr/yr (expected -1.4%; last 4.4%).
  • South Korea's March Import Price Index was up 3.4% yr/yr (last 4.3%) and Export Price Index was up 6.3% yr/yr (last 6.3%).
  • Australia's March MI Leading Index was down 0.1% m/m (last 0.1%).
  • Eurozone's final March CPI was up 0.6% m/m, as expected (last 0.4%), rising 2.2% yr/yr, as expected (last 2.3%). Final March Core CPI was up 1.0% m/m, as expected (last 0.5%), rising 2.4% yr/yr, as expected (last 2.6%). February Current Account surplus reached EUR34.3 bln (expected surplus of EUR37.3 bln; last surplus of EUR35.4 bln).
  • U.K.'s March CPI was up 0.3% m/m (expected 0.4%; last 0.4%), rising 2.6% yr/yr (expected 2.7%; last 2.8%). March Core CPI was up 0.5% m/m, as expected (last 0.4%), rising 3.4% yr/yr, as expected (last 3.5%). March RPI was up 0.3% m/m (expected 0.4%; last 0.6%), rising 3.2% yr/yr, as expected (last 3.4%). March House Prices were up 5.4% yr/yr (expected 5.1%; last 4.9%).
  • Italy's March CPI was up 0.3% m/m (expected 0.4%; last 0.2%), rising 1.9% yr/yr (expected 2.0%; last 1.6%).
• Commodities:
  • WTI Crude: +0.8% to $61.79/bbl
  • Gold: +2.3% to $3314.50/ozt
  • Copper: -0.8% to $4.59/lb
• Currencies:
  • EUR/USD: +0.7% to 1.1356
  • GBP/USD: +0.3% to 1.3266
  • USD/CNH: -0.3% to 7.3081
  • USD/JPY: -0.4% to 142.68
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -8.5%; prior 20.0%) 
  • 8:30 ET: March Retail Sales (Briefing.com consensus 1.3%; prior 0.2%), Retail Sales ex-auto (Briefing.com consensus 0.2%; prior 0.3%)
  • 9:15 ET: March Industrial Production (Briefing.com consensus -0.3%; prior 0.7%) and Capacity Utilization (Briefing.com consensus 77.9%; prior 78.2%)
  • 10:00 ET: February Business Inventories (Briefing.com consensus 0.3%; prior 0.3%) and April NAHB Housing Market Index (Briefing.com consensus 39; prior 39)
  • 10:30 ET: Weekly crude oil inventories (prior +2.55 mln)
  • 16:00 ET: February Net Long-Term TIC Flows (prior -$45.2 bln)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results