Bond Market Update

Continuing Monday's Reversal

• U.S. Treasuries are on track for a lower start, looking to continue yesterday's intraday reversal. Treasury futures faced some additional selling after yesterday's cash close, followed by a rebound that started before the focus turned to Asia. The rest of the night saw rangebound trade while global equities rebounded from their recent weakness. Treasury Secretary Bessent said that 70 countries have now reached out to negotiate better trade terms, giving a boost to sentiment. A Japanese trade delegation is expected to meet with White House officials to discuss a deal while China is reportedly unwilling to back down from the tariff fight. On a related note, European Commission President von der Leyen reached out to Chinese officials to discuss trade. The overnight data flow was light, and it included the early-morning release of the NFIB Small Business Optimism Index for March, which fell to 97.4 from 100.7. Later today, the U.S. Treasury will sell $58 bln in 3-yr notes. Crude oil holds a modest gain while the U.S. Dollar Index is down 0.1% at 103.17.
• Yield Check:
  • 2-yr: +6 bps to 3.79%
  • 3-yr: +6 bps to 3.80%
  • 5-yr: +6 bps to 3.90%
  • 10-yr: +5 bps to 4.21%
  • 30-yr: +4 bps to 4.63%

• News:
  • The Reserve Bank of New Zealand confirmed Christian Hawkesby as acting governor ahead of tomorrow's rate decision, which could be a cut.
  • Italy has reportedly lowered its 2025 growth forecast to 0.6% from 1.2%, setting its outlook for 2026 growth between 0.7% and 0.8%.
  • Japan's February Current Account surplus reached JPY2.32 trln (expected JPY2.74 trln; last JPY1.95 trln).
  • South Korea's February Current Account surplus reached $7.18 bln (last $2.94 bln).
  • Australia's April Westpac Consumer Sentiment was down 6.0% (last 4.0%). March NAB Business Confidence fell to -3 from -2 and Business Survey remained at 4.
  • New Zealand's Q1 NZIER Business Confidence increased to 19% from 16%.
  • France's February trade deficit reached EUR7.9 bln (expected deficit of EUR5.4 bln; last deficit of EUR6.5 bln) and February Current Account deficit reached EUR1.9 bln (last deficit of EUR1.3 bln).
• Commodities:
  • WTI Crude: +0.2% to $60.80/bbl
  • Gold: +1.8% to $3025.50/ozt
  • Copper: +2.1% to $4.279/lb
• Currencies:
  • EUR/USD: +0.2% to 1.0935
  • GBP/USD: +0.4% to 1.2777
  • USD/CNH: +0.2% to 7.3588
  • USD/JPY: -0.6% to 146.88
• Data out Today:
  • 6:00 ET: March NFIB Small Business Optimism Index (actual 97.4; prior 100.7)
• Treasury Auctions:
  • 13:00 ET: $58 bln 3-yr Treasury note auction results