Bond Market Update

Monday Rally Extended

• U.S. Treasuries finished Tuesday with gains across the curve after overcoming some opening weakness, making for a near carbon copy of Monday's session. Like Monday, the market faced some light pressure during the initial hour of action, but it was easy to overcome as the market returned to little changed before the start of the opening hour. Shorter tenors were at the forefront of yesterday's advance while today's gains were paced by longer tenors. Still, the daylong rally, pressured the 2-yr yield to a fresh closing low for the month ahead of tomorrow's release of the advance reading of Q1 GDP (Briefing.com consensus 0.4%; prior 2.4%). Today, the market received a disappointing Consumer Confidence Index for April (86.0; Briefing.com consensus 88.3), which showed worsening views of business conditions, employment prospects, and income prospects. Crude oil added to yesterday's loss, falling toward $60/bbl, while the U.S. Dollar Index rose 0.2% to 99.25.
• Yield Check:
  • 2-yr: -2 bps to 3.66%
  • 3-yr: -3 bps to 3.65%
  • 5-yr: -4 bps to 3.78%
  • 10-yr: -4 bps to 4.17%
  • 30-yr: -5 bps to 4.65%

• News:
  • The Atlanta Fed's GDPNow forecast for Q1 GDP was lowered to -2.7% from -2.4% in the previous estimate. The alternative model, which adjusts for imports/exports of gold and will become the default model tomorrow, calls for a 1.5% contraction.
  • The Liberal Party won Canada's election, meaning Mark Carney will remain prime minister.
  • Vietnam's prime minister said that specific negotiating points will be ready imminently.
  • Japan's trade negotiator will be in Washington over the next three days.
  • New Zealand's Finance Minister Willis warned that the growth forecasts for 2025 and 2026 will be cut.
  • Singapore's Q1 Unemployment Rate rose to 2.1% from 1.9%.
  • Eurozone's April Business and Consumer Survey fell to 93.6 from 95.0 (expected 94.5). March M3 Money Supply was up 3.6% yr/yr (expected 4.0%; last 4.0%). March Private Sector Loans rose 1.7% yr/yr (expected 1.6%; last 1.5%). March Loans to Non-Financial Corporations grew 2.3% yr/yr (last 2.2%).
  • Germany's May GfK Consumer Climate rose to -20.6 from -24.3 (expected -25.6).
  • Spain's Q1 GDP expanded 0.6% qtr/qtr (expected 0.7%; last 0.7%), growing 2.8% yr/yr (last 3.3%). April CPI was up 0.6% m/m (last 0.1%), rising 2.2% yr/yr (expected 2.0%; last 2.3%). April Core CPI was up 2.4% yr/yr (last 2.0%).
  • Italy's April Business Confidence fell to 85.7 from 86.0. April Consumer Confidence fell to 92.7 from 95.0 (expected 94.0). February Industrial Sales were down -0.4% m/m (last 3.7%), falling 1.5% yr/yr (last 1.8%).
• Today's Data:
  • The Conference Board's Consumer Confidence Index dropped to 86.0 in April (Briefing.com consensus 88.3) from an upwardly revised 93.9 (from 92.9) in March. This was the fifth straight month that consumer confidence declined.
    • The key takeaway from the report is that the drop in confidence was guided primarily by the decline in consumers' outlook, which was driven by worsening views of business conditions, employment prospects, and future income. The drop in confidence was broad-based across all age groups and most income groups.
  • The advance goods trade deficit widened to $162.0 bln in March from a revised deficit of $147.8 bln (from $147.9 bln) in February.
  • Advance Retail Inventories were down in March after falling a revised 0.1% (from +0.1%) in February.
  • Advance Wholesale Inventories were up 0.5% in March after increasing a revised 0.5% (from 0.3%) in February.
  • The FHFA Housing Price Index was up 0.1% in February after increasing a revised 0.3% (from 0.2%) in January.
  • The S&P Case-Shiller Home Price Index was up 4.5% yr/yr in February (Briefing.com consensus 4.7%) after increasing 4.7% in January.
• Commodities:
  • WTI crude: -2.7% to $60.42/bbl
  • Gold: -0.4% to $3335.10/ozt
  • Copper: -0.2% to $4.87/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1387
  • GBP/USD: -0.2% to 1.3406
  • USD/CNH: -0.2% to 7.2677
  • USD/JPY: +0.1% to 142.22
• The Day Ahead:
  • 7:00 ET: Weekly MBA Mortgage Index (prior -12.7%)
  • 8:15 ET: April ADP Employment Change (Briefing.com consensus 128,000; prior 77,000)
  • 8:30 ET: Q1 Employment Cost Index (Briefing.com consensus 0.9%; prior 0.9%), advance Q1 GDP (Briefing.com consensus 0.4%; prior 2.4%), and advance Q1 GDP Deflator (Briefing.com consensus 3.1%; prior 2.3%)
  • 9:45 ET: April Chicago PMI (Briefing.com consensus 46.0; prior 47.6)
  • 10:00 ET: March Pending Home Sales (Briefing.com consensus -0.2%; prior 2.0%), March Personal Income (Briefing.com consensus 0.4%; prior 0.8%), Personal Spending (Briefing.com consensus 0.4%; prior 0.4%), PCE Prices (Briefing.com consensus 0.0%; prior 0.3%), and Core PCE Prices (Briefing.com consensus 0.1%; prior 0.4%)
  • 10:30 ET: Weekly crude oil inventories (prior +244,000)