Bond Market Update

Inching Higher

• U.S. Treasuries are on track to begin the Tuesday session just above their flat lines with some relative weakness in the long bond and slight strength in the belly. Treasury futures followed yesterday's sharp slide with an overnight drift inside a narrow range. Treasury futures crawled to highs at the start of the European session, followed by some backtracking in recent trade. Overnight action saw a mostly positive showing from equity markets after weekend news of a 90-day reduction to tariffs on shipments between the U.S. and China. The White House clarified that the tariff on de minimis shipments from China will be lowered to 54% from 120% with a minimum $100 flat fee remaining in place. The overnight data flow was on the light side, but the market will receive April CPI (Briefing.com consensus 0.3%; prior -0.1%) and Core CPI (Briefing.com consensus 0.3%; prior 0.1%) at 8:30 ET. Crude oil is on the rise while the U.S. Dollar Index is down 0.2% at 101.63.
• Yield Check:
  • 2-yr: -1 bp to 3.99%
  • 3-yr: -1 bp to 3.98%
  • 5-yr: -2 bps to 4.08%
  • 10-yr: -1 bp to 4.45%
  • 30-yr: UNCH at 4.89%

• News:
  • The joint committee on taxation expects the large reconciliation bill to increase deficit by $3.7 trln over ten years.
  • U.S. Trade Representative Greer said he will speak with India's officials today before traveling to South Korea.
  • The Bank of Japan's latest summary of opinions noted that the 2.0% inflation target is likely to be realized.
  • Thailand's government submitted a tariff proposal to U.S. officials.
  • India's April CPI was up 3.16% yr/yr (expected 3.27%; last 3.34%).
  • Australia's May Westpac Consumer Sentiment was up 2.2% (last -6.0%). March Building Approvals fell 8.8%, as expected (last -0.3%) and Private House Approvals fell 4.5% m/m, as expected (last 1.0%). April NAB Business Confidence ticked up to -1 from -2 and NAB Business Survey fell to 2 from 4.
  • Eurozone's May ZEW Economic Sentiment rose to 11.6 from -18.5 (expected -3.5).
  • Germany's May ZEW Economic Sentiment rose to 25.2 from -14.0 (expected 10.7) and ZEW Current Conditions fell to -82.0 from -81.2 (expected -77.0).
  • U.K.'s March Average Earnings Index + Bonus was up 5.5% yr/yr (expected 5.2%; last 5.7%). March three-month employment increased by 112,000 (expected 120,000; last 206,000) and March Unemployment Rate rose to 4.5% from 4.4%, as expected.
• Commodities:
  • WTI Crude: +1.0% to $62.57/bbl
  • Gold: +1.0% to $3258.40/ozt
  • Copper: +1.3% to $4.683/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1109
  • GBP/USD: +0.4% to 1.3215
  • USD/CNH: UNCH at 7.1998
  • USD/JPY: -0.2% to 148.08
• Data out Today:
  • 6:00 ET: April NFIB Small Business Optimism Index (actual 95.8; prior 97.4)
  • 8:30 ET: April CPI (Briefing.com consensus 0.3%; prior -0.1%) and Core CPI (Briefing.com consensus 0.3%; prior 0.1%)