Bond Market Update

Long End Finds Renewed Pressure

• U.S. Treasuries started the week on a mixed note with a solid advance in the 2-yr note while longer tenors lagged, sending the 30-yr yield toward its April high (4.990%). The divergence was in place throughout the day after a night of steady selling in the futures market amid a dearth of global data. Overall trading volume was on the low side due to another day of Easter closures in Hong Kong and across Europe. Tariff-related worries remained in the picture with China threatening to retaliate against countries that side with the U.S. in the ongoing trade war. There was also renewed focus on President Trump's threat to remove Fed Chairman Powell from his post. The president does not have explicit authority to fire the Fed Chairman, but National Economic Council Director Hassett said over the weekend that President Trump is looking for a way to dismiss Mr. Powell, so a concern about Fed's independence is now in the picture. Treasuries climbed off their opening lows in morning trade, but renewed selling sent 10s and 30s to fresh lows ahead of the close while shorter tenors held onto solid gains. Crude oil gave back the bulk of its gain from Thursday while continued pressure on the greenback sent the U.S. Dollar Index down 1.1% to 98.29. Gold continued its record run, hitting a new high just shy of $3450/ozt.
• Yield Check:
  • 2-yr: -5 bps to 3.75%
  • 3-yr: -3 bps to 3.77%
  • 5-yr: +2 bps to 3.96%
  • 10-yr: +7 bps to 4.41%
  • 30-yr: +10 bps to 4.91%

• News:
  • Vice President Vance discussed trade with India's Prime Minister Modi.
  • The People's Bank of China made no changes to its one-year and five-year loan prime rates.
  • Japan may relax its auto safety rules for imports as part of trade negotiations.
  • European Central Bank policymaker Muller cautioned about the inflationary impact of tariffs, adding that increased public spending in Germany could also increase inflation.
• Today's Data:
  • Conference Board's Leading Economic Index was down 0.7% in March (Briefing.com consensus -0.4%) after falling a revised 0.2% (from -0.3%) in February.
• Commodities:
  • WTI crude: -2.4% to $62.45/bbl
  • Gold: +3.0% to $3426.90/ozt
  • Copper: +0.4% to $4.72/lb
• Currencies:
  • EUR/USD: +1.2% to 1.1524
  • GBP/USD: +0.7% to 1.3382
  • USD/CNH: -0.1% to 7.2909
  • USD/JPY: -1.1% to 140.56
• No Data on Tomorrow's Schedule
• Treasury Auctions:
  • 13:00 ET: $69 bln 2-yr Treasury note auction results