Bond Market Update

Boosted by Tariff Reveal

• U.S. Treasuries are on track for a sharply higher start with the belly expected to pace the early strength after President Trump announced reciprocal tariffs on imports to the U.S. The president announced country-specific rates with a 34% tariff being added on top of the current 20% tariff on imports from China while imports from Japan and Vietnam will be tariffed at 24% and 46%, respectively. Imports from the EU will be hit with a 20% duty while imports from Australia and New Zealand will only be subject to a 10% tariff. Last night's announcement pressured global risk sentiment while boosting sovereign debt. The dollar has faced heavy pressure, sending the U.S. Dollar Index (-1.7% to 102.00) past its March low to a level not seen since early October. Crude oil is also down sharply, falling past its 50-day moving average (70.11) to a two-week low.
• Yield Check:
  • 2-yr: -11 bps to 3.79%
  • 3-yr: -14 bps to 3.75%
  • 5-yr: -14 bps to 3.81%
  • 10-yr: -13 bps to 4.07%
  • 30-yr: -7 bps to 4.48%

• News:
  • China vowed to take "resolute" countermeasures in response while other countries are expected to push for negotiations with Washington.
  • European Central Bank President Lagarde underscored the unpredictability of the current climate while European Commission President von der Leyen said that U.S. tariffs will significantly harm the global economy.
  • China's March Caixin PMI hit 51.9 (expected 51.5; last 51.4).
  • Japan's March Services PMI hit 50.0 (expected 49.5; last 53.7).
  • Hong Kong's March Manufacturing PMI hit 48.3 (last 49.0).
  • Australia's March Services PMI hit 51.6 (expected 51.2; last 50.8). February trade surplus reached AUD2.97 bln (expected surplus of AUD5.38 bln; last surplus of AUD5.16 bln) as imports rose 1.6% m/m (last -0.4%) and exports fell 3.6% m/m (last 0.8%).
  • Eurozone's March Services PMI hit 51.0 (expected 50.4; last 50.6). February PPI was up 0.2% m/m (expected 0.3%; last 0.7%), rising 3.0% yr/yr (last 1.7%).
  • Germany's March Services PMI hit 51.3 (expected 50.2; last 51.1).
  • U.K.'s March Services PMI hit 52.5 (expected 53.2; last 51.0).
  • France's March Services PMI hit 47.9 (expected 46.6; last 45.3).
  • Italy's March Services PMI hit 52.0 (expected 52.6; last 53.0).
  • Spain's March Services PMI hit 54.7 (expected 55.6; last 56.2).
  • Swiss March CPI was unchanged m/m (expected 0.1%; last 0.6%), rising 0.3% yr/yr (expected 0.5%; last 0.3%).
• Commodities:
  • WTI Crude: -6.0% to $67.36/bbl
  • Gold: -1.8% to $3111.80/ozt
  • Copper: -2.7% to $4.906/lb
• Currencies:
  • EUR/USD: +2.5% to 1.1098
  • GBP/USD: +1.4% to 1.3179
  • USD/CNH: -0.3% to 7.3006
  • USD/JPY: -1.8% to 146.05
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 224,000; prior 224,000), Continuing Claims (prior 1.856 mln), and February Trade Balance (Briefing.com consensus -$121.0 bln; prior -$131.4 bln)
  • 9:45 ET: Final March S&P Global U.S. Services PMI (prior 54.3)
  • 10:00 ET: March ISM Services (Briefing.com consensus 53.2%; prior 53.5%)
  • 10:30 ET: Weekly natural gas inventories (prior +37 bcf)