Bond Market Update

Holding Steady

• U.S. Treasuries had a relatively calm overnight session, with maturities across the curve holding to tight trading ranges in front of the Personal Income and Spending Report for April at 8:30 a.m. ET. That report contains the PCE Price Index and Core-PCE Price Index, which are the Fed's preferred inflation gauges. Separately, the Treasury market is expected to garner some support from pension fund rebalancing activity at month's end, some of which likely availed itself in yesterday's nearly one-way trade (lower in yield) during the cash session as the market also digested a batch of soft data and legal rulings involving the Trump administration's tariff plans. In related news, Treasury Secretary Bessent told Fox News that the U.S.-China talks are "a bit stalled." The U.S. Dollar Index is up 0.3% to 99.57.
• Yield Check:
  • 2-yr: unch at 3.94%
  • 3-yr: -1 bp to 3.90%
  • 5-yr: -1 bps to 3.99%
  • 10-yr: -1 bp to 4.42%
  • 30-yr: -1 bps to 4.92%

• News:
  • Treasury Secretary Scott Bessent in interview says he will meet with his Japanese counterparts on trade today, but China talks are "a bit stalled," according to Fox News
  • President Trump is considering using different authority io impose tariffs for 150 days if appeal of court ruling fails, according to The Wall Street Journal
  • Japan's top trade negotiator is visiting Washington today and there was speculation that an announcement about a trade agreement could be made shortly after Wall Street closes for the day
  • ECB policymaker Panetta said that there is reduced room to cut rates, but the macroeconomic outlook remains weak and could be worsened by trade tensions
  • Bank of England policymaker Taylor spoke in favor of lower rates, saying that downside risks are building
  • Japan's May Tokyo CPI 3.4% (last 3.4%) and Tokyo Core CPI 3.6% y/yr (expected 3.5%; last 3.4%)
• Commodities:
  • WTI crude: +1.2% to $61.69/bbl
  • Gold: -0.8% to $3317.70/ozt
  • Copper: +0.4% to $4.69/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1332
  • GBP/USD: -0.1% to 1.3474
  • USD/CNH: +0.1% to 7.1968
  • USD/JPY: -0.1% to 144.02
• The Day Ahead:
  • 08:30 ET: April Adv. Intl. Trade in Goods (prior -$162.0B), Retail Inventories (prior -0.1%), and Wholesale Inventories (prior 0.5%)
  • 08:30 ET: April Personal Income (Briefing.com consensus 0.3%; prior 0.5%), Personal Spending (Briefing.com consensus 0.2%; prior 0.7%), PCE Price Index (Briefing.com consensus 0.1%; prior 0.0%), and Core-PCE Price Index (Briefing.com consensus 0.1%; prior 0.0%)
  • 09:45 ET: May Chicago PMI (Briefing.com consensus 45.0; prior 44.6)
  • 10:00 ET: May Univ. of Michigan Consumer Sentiment - Final (Briefing.com consensus 50.8; prior 50.8)
  • 16:45 ET: San Francisco Fed President Daly (non-FOMC voter)