Bond Market Update

Another Bounce Attempt Rebuffed

• U.S. Treasuries recorded their third consecutive day of losses after giving back their slim opening gains, essentially making for a repeat of yesterday's price action. The trading day started with slim gains across the curve after a quiet night on the global news front. The market received a handful of economic reports, including weaker-than-expected April social financing figures from China and in-line final April CPI readings from Germany and Spain. Treasuries started facing pressure shortly after the open, but they put up fight during the initial hour. However, the effort failed, resulting in a retreat past yesterday's lows as the day went on. The selling lifted the 2-yr yield back above its 200-day moving average (4.038%) to its highest close since late February while the 30-yr yield crept closer to its January high (5.005%). Crude oil recorded its first loss in five days while the U.S. Dollar Index returned to little changed at 101.01 after recovering an overnight loss.
• Yield Check:
  • 2-yr: +3 bps to 4.05%
  • 3-yr: +4 bps to 4.05%
  • 5-yr: +4 bps to 4.16%
  • 10-yr: +3 bps to 4.53%
  • 30-yr: +2 bps to 4.97%

• News:
  • China Securities Journal reported that stock buybacks by Chinese companies increased in April.
  • Korea Development Institute lowered its domestic growth forecast for 2025 to 0.8% from 1.6%.
  • China's April New Loans reached CNY280.0 bln (expected CNY710.0 bln; last CNY3.64 trln), April Outstanding Loans grew 7.2% yr/yr (expected 7.4%; last 7.4%), and April total social financing reached CNY1.16 trln (expected CNY1.22 trln; last CNY5.89 trln).
  • Japan's April PPI was up 0.2% m/m, as expected (last 0.4%), rising 4.0% yr/yr, as expected (last 4.3%).
  • South Korea's April Unemployment Rate fell to 2.7% from 2.9%.
  • India's April WPI Inflation was up 0.85% yr/yr (expected 1.76%; last 2.05%).
  • Australia's Q1 Wage Price Index was up 0.9% qtr/qtr (expected 0.8%; last 0.7%), rising 3.4% yr/yr (expected 3.2%; last 3.2%).
  • New Zealand's April Electronic Card Retail Sales were unchanged m/m (last -0.8%), falling 0.3% yr/yr (last -1.6%).
  • Germany's April CPI was up 0.4% m/m, as expected (last 0.3%), rising 2.1% yr/yr, as expected (last 2.2%).
  • Spain's April CPI was up 0.6% m/m, as expected (last 0.1%), rising 2.2% yr/yr, as expected (last 2.3%). April Core CPI was up 2.4% yr/yr, as expected (last 2.0%).
• Today's Data:
  • The weekly MBA Mortgage Index rose 1.1% to follow last week's 11.0% increase. The Purchase Index rose 2.3% while the Refinance Index was down 0.4%.
  • Weekly crude oil inventories increased by 3.45 mln barrels after decreasing by 2.03 mln barrels a week ago.
• Commodities:
  • WTI crude: -1.0% to $63.11/bbl
  • Gold: -1.8% to $3188.90/ozt
  • Copper: -1.5% to $4.65/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1172
  • GBP/USD: -0.4% to 1.3258
  • USD/CNH: +0.2% to 7.2132
  • USD/JPY: -0.5% to 146.79
• The Day Ahead:
  • 8:30 ET: April PPI (Briefing.com consensus 0.3%; prior -0.4%), Core PPI (Briefing.com consensus 0.3%; prior -0.1%), April Retail Sales (Briefing.com consensus 0.2%; prior 1.4%), Retail Sales ex-auto (Briefing.com consensus 0.5%; prior 0.5%), May Empire State Manufacturing (Briefing.com consensus 1.0; prior -8.1), May Philadelphia Fed (Briefing.com consensus -6.0; prior -26.4), weekly Initial Claims (Briefing.com consensus 226,000; prior 228,000), and Continuing Claims (prior 1.879 mln)
  • 9:15 ET: April Industrial Production (Briefing.com consensus 0.3%; prior -0.3%) and Capacity Utilization (Briefing.com consensus 77.9%; prior 77.8%)
  • 10:00 ET: May Business Inventories (Briefing.com consensus 0.2%; prior 0.2%) and May NAHB Housing Market Index (Briefing.com consensus 40; prior 40)
  • 10:30 ET: Weekly natural gas inventories (prior +104 bcf)