Bond Market Update

Pulling Back

• U.S. Treasuries are on track for a lower start with the belly expected to show some relative weakness after three days of gains across the curve. The early weakness comes after a night of steady selling while Asian equities climbed. Japan's Trade Representative Akazawa met with U.S. officials, including President Trump, yesterday and he is expected to return for another meeting later this month. The meeting was deemed a success, and today, Italy's Prime Minister Meloni will meet with President Trump today to discuss trade. In Europe, the European Central Bank is expected to announce a 25-basis point rate cut at 8:15 ET. Today's session will see the release of March Housing Starts (Briefing.com consensus 1.418 mln; prior 1.501 mln) alongside weekly Initial Claims (Briefing.com consensus 225,000; prior 223,000), leading up to an early close at 14:00 ET. Crude oil is building on yesterday's gain while the U.S. Dollar Index is up 0.1% at 99.52.
• Yield Check:
  • 2-yr: +1 bp to 3.80%
  • 3-yr: +1 bp to 3.80%
  • 5-yr: +3 bps to 3.94%
  • 10-yr: +2 bps to 4.30%
  • 30-yr: +2 bps to 4.77%

• News:
  • The Bank of Korea left its policy rate at 2.75%, as expected.
  • Bank of Japan Governor Ueda cautioned that keeping rates at a low level while inflation accelerates could force the Bank of Japan to hike rates rapidly.
  • The Bank of England's latest Credit Conditions survey showed that credit availability to households increased in Q1 and is expected to increase again in Q2. Italy's Prime Minister Meloni will meet with President Trump today to discuss trade.
  • Japan's March trade deficit reached JPY0.23 trln (expected deficit JPY0.25 trln; last surplus JPY0.19 trln) as exports rose 3.9% yr/yr (expected 4.5%; last 11.4%) and imports grew 2.0% yr/yr (expected 3.1%; last -0.7%).
  • Singapore's March trade surplus SGD5.242 bln (last surplus SGD6.182 bln) as non-oil exports fell 7.6% m/m (last 2.6%), increasing 5.4% yr/yr (expected 13.6%; last 7.6%).
  • Australia's March Employment increased by 32.2K (expected +39.8K; last -57.5K) and full employment increased by 15.0K (last -43.9K). March Unemployment Rate rose to 4.1% from 4.0% (expected 4.2%) and March Participation Rate rose to 66.8% from 66.7% (expected 67.0%). NAB Quarterly Business Confidence ticked up to -4 from -5.
  • New Zealand's Q1 CPI was up 0.9% qtr/qtr (expected 0.8%; last 0.5%), rising 2.5% yr/yr (expected 2.3%; last 2.2%).
  • Germany's March PPI was down 0.7% m/m (expected -0.1%; last -0.1%), falling 0.2% yr/yr (expected 0.4%; last 0.5%).
  • Swiss March trade surplus reached CHF6.350 bln (expected surplus CHF5.220 bln; last surplus CHF4.741 bln).
• Commodities:
  • WTI Crude: +1.3% to $63.30/bbl 
  • Gold: -0.2% to $3338.40/ozt
  • Copper: -2.2% to $4.582/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1365
  • GBP/USD: -0.1% to 1.3232
  • USD/CNH: +0.1% to 7.3018
  • USD/JPY: +0.5% to 142.53
• Data out Today:
  • 8:30 ET: March Housing Starts (Briefing.com consensus 1.418 mln; prior 1.501 mln), Building Permits (Briefing.com consensus 1.455 mln; prior 1.456 mln), weekly Initial Claims (Briefing.com consensus 225,000; prior 223,000), Continuing Claims (prior 1.850 mln), and April Philadelphia Fed Survey (Briefing.com consensus 10.0; prior 12.5)
  • 10:30 ET: Weekly natural gas inventories (prior +57 bcf)