Bond Market Update

Tariff Turmoil Continues

• U.S. Treasuries are on track for another higher start in shorter tenors while the long bond is set to begin the day in negative territory after a volatile night across the complex. Overnight action saw a sharply higher start that briefly overtook highs from Friday, but the rest of the night featured a retreat from the early highs with longer tenors leading the reversal while global equities struggled mightily. Officials from the Trump administration spoke over the weekend, explaining the intended purpose of tariffs. In Asia, Vietnam and Taiwan expressed interest in reducing tariffs on both sides to zero while India is also looking to negotiate better terms with the U.S. Meanwhile, the EU will reportedly announce a unified response to the tariffs later today. Today's economic data will be limited to the 15:00 ET release of February Consumer Credit (Briefing.com consensus $15.1 bln; prior $18.1 bln), which is unlikely to invite a strong market reaction. However, Thursday morning will bring the release of March CPI (Briefing.com consensus 0.1%; prior 0.2%) at 8:30 ET. Crude oil has remained pressured, trading at a fresh low for the year, while the U.S. Dollar Index is little changed at 103.05.
• Yield Check:
  • 2-yr: -9 bps to 3.58%
  • 3-yr: -9 bps to 3.56%
  • 5-yr: -6 bps to 3.65%
  • 10-yr: -1 bp to 3.98%
  • 30-yr: +4 bps to 4.43%

• News:
  • The Reserve Bank of New Zealand's shadow board recommends a 25-bps rate cut on Wednesday while Kiwibank has made the case for a 50-bps reduction.
  • EU trade commissioner Sefcovic said that free trade cooperation with other countries will be accelerated.
  • Germany's incoming Chancellor Merz called for tax cuts, deregulation, and measures to protect German competitiveness. 
  • French President Macron was met with pushback when he requested leaders of the 50 largest French companies to divest from the United States, according to Le Figaro.
  • China's March FX Reserves reached $3.241 trln (last $3.227 trln).
  • Japan's February Average Cash Earnings were up 3.1% yr/yr (expected 3.1%; last 1.8%) and February Overtime Pay rose 2.2% yr/yr (last 1.5%). February Leading Index fell to 107.9 from 108.2 (expected 107.8) and Coincident Indicator rose 0.8% m/m (last 0.1%).
  • Hong Kong's February Foreign Reserves reached $413.10 bln (last $416.40 bln).
  • Singapore's February Foreign Reserves reached $381.1 bln (last $379.3 bln).
  • Australia's March ANZ Job Advertisements were up 0.4% m/m (last -1.3%).
  • Eurozone's April Sentix Investor Confidence fell to -19.5 from -2.9 (expected -8.9). February Retail Sales were up 0.3% m/m (expected 0.5%; last 0.0%), rising 2.3% yr/yr (expected 1.8%; last 1.8%).
  • Germany's February trade surplus reached EUR17.7 bln (expected surplus of EUR18.4 bln; last surplus of EUR16.2 bln) as imports rose 0.7% m/m (last 5.0%) and exports grew 1.8% m/m (last 0.0%). February Industrial Production was down 1.3% m/m (expected -0.9%; last 2.0%), falling 4.0% yr/yr (last -1.5%).
  • U.K.'s March Halifax House Price Index was down 0.5% m/m (expected 0.2%; last -0.2%) but up 2.8% yr/yr (last 2.8%).
  • Swiss March Foreign Reserves reached $725.6 bln (last $735.4 bln).
• Commodities:
  • WTI Crude: -2.1% to $60.69/bbl
  • Gold: +0.6% to $3054.20/ozt
  • Copper: -0.2% to $4.389/lb
• Currencies:
  • EUR/USD: +0.1% to 1.0967
  • GBP/USD: -0.5% to 1.2822
  • USD/CNH: +0.4% to 7.3213
  • USD/JPY: -0.4% to 146.38
• Data out Today:
  • 15:00 ET: February Consumer Credit (Briefing.com consensus $15.1 bln; prior $18.1 bln)