Bond Market Update

Updated: 23-Apr-25 15:08 ET
Treasury Market Summary

Turbulent Action Resumes

  • U.S. Treasuries had another mixed finish on Wednesday with the long bond building on Tuesday's outperformance while the short end lagged for the second day in a row. The trading day started with big gains in longer tenors and another stampede into risk after President Trump said last evening that he does not intend to fire Fed Chairman Powell after all. The opening advance sent the 10-yr yield past its 50-day moving average (4.320%) to a two-week low of 4.261%, but that entire move was reversed later in the day. Treasuries added to their opening gains during the first hour of action but fell from highs after the flash S&P Global U.S. Manufacturing PMI for April hit 50.7, up from 50.2 in March, reflecting an accelerating expansion. Meanwhile, flash S&P Global U.S. Services PMI (51.4) decelerated from its March reading (54.4), but it remained in expansionary territory. Treasuries backtracked from their highs as the morning went on while equities got off to a strong start. Tariff volatility was back, starting with a morning report from Bloomberg that President Trump is thinking about lowering the tariff rate range on imports from China to 50-65% as a show of goodwill. The White House later clarified that any tariff reduction would be a part of negotiations while Treasury Secretary Bessent added that a final deal with China could take up to three years to complete, which cooled some of the risk optimism. Treasuries briefly bounced off lows after the U.S. Treasury followed yesterday's weak 2-yr note sale with a solid 5-yr note offering, but they continued to fresh lows into the close. The FOMC released its latest policy minutes, but the document did not contain any surprises. Crude oil gave back an overnight gain amid reports that some OPEC+ members are eager to increase output while the U.S. Dollar Index climbed 0.9% to 99.84, extending yesterday's bounce off a three-year low.
  • Yield Check:
    • 2-yr: +5 bps to 3.86%
    • 3-yr: +7 bps to 3.88%
    • 5-yr: +4 bps to 4.01%
    • 10-yr: UNCH at 4.39%
    • 30-yr: -5 bps to 4.83%
  • News:
    • Treasury Secretary Bessent said that he does not intend to pursue currency talks with Japan.
    • Japan's flash April Manufacturing PMI hit 48.5 (expected 48.7; last 48.4) and flash Services PMI hit 52.2 (last 50.0). February Tertiary Industry Activity Index rose to -0.90 from -8.6.
    • South Korea's April Consumer Confidence rose to 93.8 from 93.4.
    • India's flash April Manufacturing PMI hit 58.4 (last 58.1) and flash Services PMI hit 59.1 (last 58.5).
    • Singapore's March CPI was down 0.1% m/m (last 0.8%) but up 0.9% yr/yr (expected 1.0%; last 0.9%). March Core CPI was up 0.5% yr/yr (last 0.6%).
    • Hong Kong's March CPI was unchanged m/m (last -0.1%), rising 1.4% yr/yr (last 1.4%)
    • Australia's flash April Manufacturing PMI hit 51.7 (last 52.1) and flash Services PMI hit 51.4 (last 51.6).
    • New Zealand's March Credit Card Spending was up 0.8% yr/yr (last 0.8%).
    • Eurozone's February Construction Output was down 0.48% m/m (last 0.58%). February trade surplus reached EUR24.0 bln (last surplus of EUR800 mln). Flash April Manufacturing PMI hit 48.7 (expected 47.4; last 48.6) and flash Services PMI hit 49.7 (expected 50.4; last 51.0).
    • Germany's flash April Manufacturing PMI hit 48.0 (expected 47.5; last 48.3) and flash Services PMI hit 48.8 (expected 50.3; last 50.9).
    • U.K.'s flash April Manufacturing PMI hit 44.0, as expected (last 44.9) and flash Services PMI hit 48.9 (expected 51.5; last 52.5). March Public Sector Net Borrowing reached GBP16.44 bln (expected GBP15.40 bln; last GBP12.31 bln).
    • France's flash April Manufacturing PMI hit 48.2 (expected 47.9; last 48.5) and flash Services PMI hit 46.8 (expected 47.7; last 47.9).
  • Today's Data:
    • The S&P Global U.S. Manufacturing PMI hit 50.7 in the flash reading for April, up from 50.2 in March.
    • The S&P Global U.S. Services PMI hit 51.4 in the flash reading for April, down from 54.4 in March.
    • The weekly MBA Mortgage Index fell 12.7% after falling 8.5% a week ago. The Purchase Index was down 6.6% while the Refinance Index was down 20.0%.
    • Weekly crude oil inventories increased by 244,000 barrels after increasing by 515,000 barrels a week ago.
    • $70 bln 5-year Treasury note auction results (prior 12-auction average): 
      • High yield: 3.995% (4.183%).
      • Bid-to-cover: 2.41 (2.38).
      • Indirect bid: 64.0% (69.1%).
      • Direct bid: 24.8% (17.6%).
  • Commodities:
    • WTI crude: -2.2% to $62.20/bbl
    • Gold: -3.7% to $3293.30/ozt 
    • Copper: UNCH at $4.84/lb
  • Currencies: 
    • EUR/USD: -0.4% to 1.1319
    • GBP/USD: -0.2% to 1.3260
    • USD/CNH: -0.2% to 7.2857
    • USD/JPY: +0.7% to 143.48
  • The Day Ahead:
    • 8:30 ET: March Durable Orders (Briefing.com consensus 1.5%; prior 0.9%), Durable Orders ex-transport (Briefing.com consensus 0.3%; prior 0.7%), weekly Initial Claims (Briefing.com consensus 220,000; prior 215,000), and Continuing Claims (prior 1.885 mln)
    • 10:00 ET: March Existing Home Sales (Briefing.com consensus 4.20 mln; prior 4.26 mln)
    • 10:30 ET: Weekly natural gas inventories (prior +16 bcf)
  • Treasury Auctions:
    • 13:00 ET: $44 bln 7-yr Treasury note auction results
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