Bond Market Update

Updated: 30-Apr-25 15:14 ET
Treasury Market Summary

Staying True to April Form

  • U.S. Treasuries had a mixed finish to a mixed month, as the 2-yr note built on its April outperformance while the long bond retreated, adding to this month's loss. Treasuries started the session in search of their fifth consecutive day of gains after a night that featured a rush of economic reports ahead of tomorrow's May Day closures. The news included China's Manufacturing PMI for April (49.0), which fell into contractionary territory, reaching its lowest level since December 2023, and a stronger-than-expected flash reading of Q1 GDP for the eurozone (0.4%; expected 0.2%). The U.S. session also saw a torrent of data, headlined by the advance reading of Q1 GDP (-0.3%; Briefing.com consensus 0.4%), which showed an unexpected contraction owed to a rush of imports ahead of tariffs. Treasuries reversed from their opening highs in immediate reaction to the report, which followed the release of a disappointing ADP Employment Change report for April (62,000; Briefing.com consensus 128,000). The post-data selling was short-lived, abating after the 10-yr yield briefly crossed above its 200-day moving average (4.221%). Treasuries continued their rebound as the morning went on, with the 5-yr note and shorter tenors rising above their opening levels as the morning went on while 10s and 30s never made it back into the green. The price action made for a good reflection of this month's trading dynamic as the short end rallied amid concerns about the near-term impact of tariffs while the long end underperformed amid concerns about the impact that trade policy will have on future inflation. Crude oil fell toward its April low, giving up more than $13/bbl for the month, while the U.S. Dollar Index rose 0.3% to 99.49, narrowing this week's loss to 4.5%.
  • Yield Check:
    • 2-yr: -4 bps to 3.62% (-29 bps in April)
    • 3-yr: -4 bps to 3.61% (-30 bps in April)
    • 5-yr: -2 bps to 3.75% (-23 bps in April)
    • 10-yr: UNCH at 4.18% (-7 bps in April)
    • 30-yr: +3 bps to 4.68% (+7 bps in April)
  • News:
    • The Atlanta Fed's GDPNow forecast for Q2 GDP was started at 2.4%.
    • The U.S. Treasury announced that it will sell $125 bln in Treasury notes and bonds next week. The Treasury also noted that it is studying enhancements to its buyback program, and it plans to keep auction sizes at their current levels for at least the next several quarters.
    • Australia's Treasurer Chalmers said that he expects more rate cuts after today's release of CPI for Q1.
    • China's April Manufacturing PMI hit 49.0 (expected 49.8; last 50.5). April Non-Manufacturing PMI hit 50.4 (expected 50.7; last 50.8). April Caixin Manufacturing PMI hit 50.4 (expected 49.9; last 51.2).
    • Japan's March Industrial Production (prelim) was down 1.1% m/m (expected -0.5%; last +2.3%). March Retail Sales rose 3.1% yr/yr (expected +3.6%; last +1.3%). March Large Retailers' Sales were down 1.2% m/m (last +0.4%) but up 3.0% yr/yr (last +2.0%).
    • South Korea's March Industrial Production rose 2.9% m/m (expected +0.2%; last +1.4%), growing 5.3% yr/yr (expected +3.3%; last +7.1%). March Retail Sales were down 0.3% m/m (last +1.9%). March Service Sector Output was down 0.3% m/m (last +0.5%).
    • Singapore's March Bank Lending reached SGD846.5B (last SGD 841.1B).
    • Australia's Q1 CPI was up 0.9% q/q (expected +0.8%; last +0.2%), rising 2.4% yr/yr (expected +2.3%; last +2.4%). March Private Sector Credit was up 0.5% m/m, as expected (last +0.5%) and March Housing Credit was also up 0.5% m/m (last +0.4%).
    • New Zealand's April ANZ Business Confidence hit 49.3 (last 57.5). April NBNZ Own Activity slowed to 47.7% from 48.6%.
    • Eurozone's flash Q1 GDP expanded 0.4% qtr/qtr (expected 0.2%; last 0.2%), growing 1.2% yr/yr (expected 1.0%; last 1.2%).
    • Germany's March Import Prices were down 1.0% m/m (exp -0.7%; last +0.3%) but up 2.1% yr/yr (last +3.6%). March Retail Sales were down 0.2% m/m (expected -0.4%; last +0.2%) but up 2.2% yr/yr (last 0.0%). Q1 GDP expanded 0.2% q/q (expected +0.2%; last -0.2%) but was down 0.2% yr/yr (expected -0.2%; last -0.2%). April Unemployment increased by 4K (expected +16K; last +26K). April Unemployment Rate remained at 6.3%, as expected.
    • U.K.'s April Nationwide HPI was down 0.6% m/m (exp -0.1%; last 0.0%) but up 3.4% yr/yr (exp +4.1%; last +3.9%).
    • France's March Consumer Spending was down 1.0% m/m (exp 0.0%; last -0.2%). Q1 GDP was up 0.1% q/q (exp +0.1%; last -0.1%), rising 0.8% yr/yr (exp +0.7%; last +0.8%). April CPI was up 0.5% m/m (exp +0.4%; last +0.2%), rising 0.8% yr/yr (exp +0.8%; last +0.8%).
    • Italy's Q1 GDP expanded 0.3% q/q (exp +0.2%; last +0.2%), growing 0.6% yr/yr (last +0.5%). April CPI was up 0.2% m/m, as expected (last 0.3%), rising 2.0% yr/yr, as expected (last 1.9%). March PPI was down 2.4% m/m (last 0.7%) but up 3.9% yr/yr (last 6.2%).
    • Swiss April KOF Leading Indicators hit 97.1 (exp 101.8; last 103.2). April ZEW Expectations hit -51.6 (last -10.7).
  • Today's Data:
    • The April ADP Employment Change Report showed an estimated 62,000 jobs were added to private-sector payrolls (Briefing.com consensus 128,000), and the pay for job-stayers rose 4.5% year-over-year, which was a slight deceleration from March.
    • The Q1 Employment Cost Index was up 0.9%, as expected, for the three-month period ending in March 2025, following a 0.9% increase for the three-month period ending in December 2024. Wages and salaries increased 0.8%, versus 1.0% for the prior quarter, and benefit costs jumped 1.2%, versus 0.8% for the prior quarter.
      • The key takeaway from the report is that employment costs have softened year-over-year, with compensation costs increasing 3.6% for the 12 months ending in March 2025, versus 4.2% for the 12 months ending in March 2024.
    • The Adv. Q1 GDP report showed a 0.3% decline in real GDP (Briefing.com consensus 0.4%), with net exports subtracting 4.83 percentage points from growth, following a 2.4% increase in Q4. The GDP Price Deflator jumped 3.7% (Briefing.com consensus 3.1%) following a 2.3% increase in Q4.
      • The key takeaway from the report is that there was obvious frontrunning of the tariff measures, which showed up in a 41.3% increase in imports. Separately, consumer spending growth was decent at 1.8%, yet that was a marked slowdown from the 4.0% growth seen in Q4.
    • The ADP Employment Change report pointed to the addition of 62,000 private payrolls in April (Briefing.com consensus 128,000) after increasing a revised 147,000 (from 155,000) in March.
    • Personal income increased 0.5% month-over-month in March (Briefing.com consensus 0.4%) after increasing a revised 0.7% (from 0.8%) in February. Personal spending rose 0.7% month-over-month (Briefing.com consensus 0.4%) after increasing a revised 0.5% (from 0.4%) in February. The PCE Price Index was unchanged month-over-month (Briefing.com consensus 0.0%), which left it up 2.3% year-over-year versus a revised 2.7% (from 2.5%) in February. The core-PCE Price Index was also unchanged month-over-month (Briefing.com consensus 0.1%), which left it up 2.6% year-over-year versus a revised 3.0% (from 2.8%) in February.
      • The key takeaway from the report is that it showed an acceleration in spending as consumers prepared for the implementation of tariffs. The PCE Price Index decelerated to 2.3% year-over-year from 2.7% while the core PCE Price Index decelerated to 2.6% year-over-year from 3.0%, making for a welcome sight.
    • The Chicago PMI hit 44.6 in April (Briefing.com consensus 46.0), down from 47.6 in March.
    • Pending Home Sales were up 6.1% in March (Briefing.com consensus -0.2%) after increasing a revised 2.1% (from 2.0%) in February.
    • The weekly MBA Mortgage Index fell 4.2% to follow last week's 12.7% drop. The Purchase Index was down 4.4% while the Refinance Index fell 3.7%.
    • Weekly crude oil inventories decreased by 2.696 mln barrels after increasing by 244,000 barrels a week ago.
  • Commodities:
    • WTI crude: -3.8% to $58.12/bbl
    • Gold: -0.5% to $3318.50/ozt
    • Copper: -5.3% to $4.61/lb
  • Currencies:
    • EUR/USD: -0.3% to 1.1350
    • GBP/USD: -0.5% to 1.3343
    • USD/CNH: UNCH at 7.2654
    • USD/JPY: +0.3% to 142.73
  • The Day Ahead:
    • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 225,000; prior 222,000) and Continuing Claims (prior 1.841 mln)
    • 9:45 ET: Final April S&P Global U.S. Manufacturing PMI (prior 50.2)
    • 10:00 ET: March Construction Spending (Briefing.com consensus 0.3%; prior 0.7%) and April ISM Manufacturing Index (Briefing.com consensus 47.9%; prior 49.0%)
    • 10:30 ET: Weekly natural gas inventories (prior +88 bcf)
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