Bond Market Update

Bounce Extended

• U.S. Treasuries are on track for an extension of yesterday's rebound from three days of losses. Treasury futures began inching higher during the Asian session, followed by some more gains once the focus turned to action in Europe where other sovereign debt also trades higher. Japan's economy contracted in Q1, making for the first decrease in activity in three quarters. Elsewhere, eurozone's trade surplus for March (EUR36.8 bln; expected EUR17.5 bln) was much bigger than expected, suggesting a rush of activity ahead of tariffs. The U.S. session will see the release of April Housing Starts (Briefing.com consensus 1.383 mln; prior 1.324 mln) and April Import/Export prices at 8:30 ET, followed by the preliminary May reading of the University of Michigan's Consumer Sentiment Index (Briefing.com consensus 55.0; prior 52.2) at 10:00 ET. Crude oil holds a modest gain while the U.S. Dollar Index is down 0.1% at 100.77.
• Yield Check:
  • 2-yr: -3 bps to 3.94%
  • 3-yr: -4 bps to 3.92%
  • 5-yr: -4 bps to 4.03%
  • 10-yr: -5 bps to 4.41%
  • 30-yr: -6 bps to 4.86%

• News:
  • The Trump administration is reportedly considering adding two Chinese chipmakers to the China entity list.
  • Bank of Japan policymaker Nakamura warned that additional rate hikes from the BoJ could dampen consumption and investment given the ongoing tariff uncertainty.
  • British Prime Minister Starmer said that he is confident in reaching a trade deal with the EU ahead of Monday meeting with EU leaders.
  • The European Parliament's trade committee backed increased EU tariffs on certain agricultural imports from Russia and Belarus.
  • Japan's Q1 GDP contracted 0.2% q/q (expected -0.1%; last +0.6%), falling 0.7% yr/yr (expected -0.2%; last +2.4%). Q1 GDP Private Consumption was unchanged qtr/qtr (expected +0.1%; last +0.1%). Q1 GDP Capital Expenditure was up 1.4% qtr/qtr (expected +0.8%; last +0.8%). Q1 GDP External Demand was down 0.8% qtr/qtr (expected -0.6%; last +0.7%). Q1 GDP Price Index was up 3.2% yr/yr (expected +3.2%; last +2.9%). March Industrial Production rose 0.2% m/m (expected -1.1%; last 2.3%) and Capacity Utilization was down 2.4% m/m (last -1.1%).
  • South Korea's April Export Price Index rose 0.7% yr/yr (last +6.3%) and Import Price Index fell 2.3% yr/yr (last +3.4%).
  • Hong Kong's Q1 GDP expanded 1.9% qtr/qtr (expected 2.0%; last 0.8%), growing 3.1% yr/yr, as expected (last 2.4%).
  • Singapore's April trade surplus reached SGD14.20 bln (last surplus of SGD5.35 bln) as non-oil exports rose 10.4% m/m (last -7.5%), increasing 12.4% yr/yr (expected 4.0%; last 5.4%).
  • New Zealand's April Business NZ PMI hit 53.9 (last 53.2). Q1 Inflation Expectations increased to 2.3% from 2.1%. April RBNZ Offshore Holdings fell to 58.80% from 59.20%.
  • Eurozone's March trade surplus reached EUR36.8 bln (expected surplus of EUR17.5 bln; last surplus of EUR24.8 bln).
  • France's Q1 Unemployment Rate rose to 7.4% from 7.3%, as expected.
  • Italy's April CPI was up 0.1% m/m (expected 0.2%; last 0.3%), rising 1.9% yr/yr (expected 2.0%; last 1.9%). March trade surplus reached EUR3.657 bln (expected surplus of EUR5.150 bln; last surplus of EUR4.444 bln).
  • Swiss Q1 Industrial Production was up 8.5% yr/yr (last 2.1%).
• Commodities:
  • WTI Crude: +0.4% to $61.86/bbl
  • Gold: -1.5% to $3176.40/ozt
  • Copper: -1.4% to $4.619/lb
• Currencies:
  • EUR/USD: UNCH at 1.1192
  • GBP/USD: -0.1% to 1.3286
  • USD/CNH: UNCH at 7.2060
  • USD/JPY: +0.1% to 145.65
• Data out Today:
  • 8:30 ET: April Housing Starts (Briefing.com consensus 1.383 mln; prior 1.324 mln) and Building Permits (Briefing.com consensus 1.450 mln; prior 1.481 mln), April Import Prices (prior -0.1%), Import Prices ex-oil (prior 0.1%), Export Prices (prior 0.0%), and Export Prices ex-agriculture (prior -0.1%)
  • 10:00 ET: Preliminary May University of Michigan Consumer Sentiment (Briefing.com consensus 55.0; prior 52.2) 
  • 16:00 ET: March net Long-Term TIC Flows (prior $112.0 bln)