Bond Market Update

Slipping Ahead of February CPI

• U.S. Treasuries are on track for a modestly lower start across the curve. Treasury futures climbed in early evening action, but their modest gains faded as the night went on with the market hitting lows about two hours ago. The selling has coincided with weakness in other sovereign debt while global equity markets have been mixed. The International Energy Agency proposed a 400-million barrel reserve release to lower global oil prices. G7 officials will discuss the proposal today, though there are concerns about how quickly the reserves will be accessible. Today's session will feature the 8:30 ET release of February CPI (Briefing.com consensus 0.3%; prior 0.2%) and Core CPI (Briefing.com consensus 0.2%; prior 0.3%), a report that will be watched closely by a market that is already expecting a hot reading for March due to the surge in energy prices. Crude oil hovers near $85/bbl while the U.S. Dollar Index is up 0.2% at 98.98.
• Yield Check:
  • 2-yr: +3 bps to 3.60%
  • 3-yr: +3 bps to 3.62%
  • 5-yr: +3 bps to 3.75%
  • 10-yr: +3 bps to 4.17%
  • 30-yr: +3 bps to 4.81%

• News:
  • FT reported that JPMorgan has started marking down some private credit portfolios linked to software debt.
  • Honeywell (HON) sold $15.5 bln worth of senior notes, adding to yesterday's big corporate debt offering slate.
  • Japan's trade minister Akazawa said that Japan can release oil reserves without coordinating with G7.
  • South Korea's exports were up 55.6% yr/yr through the first ten days of March with chip exports spiking 175.9% to a record of $7.6 bln.
  • South Korea's Industry Ministry said that it took part in IEA discussions about oil reserves and it is reviewing which position to take.
  • The Reserve Bank of Australia is expected to announce a rate hike next week after hawkish comments from Deputy Governor Hauser.
  • The U.K.'s Office for Budget Responsibility expects British inflation to end the year at 3% if energy prices remain at their current levels.
  • European Central Bank policymakers Nagel, Kazimir, and Kazaks spoke in favor of holding policy steady at next week's ECB meeting.
  • Japan's February PPI was down 0.1% m/m (expected 0.1%; last 0.2%) but up 2.0% yr/yr (expected 2.2%; last 2.3%).
  • Germany's February CPI was up 0.2% m/m, as expected (last 0.1%), rising 1.9% yr/yr, as expected (last 2.1%)
  • Spain's January Retail Sales rose 4.0% yr/yr (last 2.8%).
• Commodities:
  • WTI Crude: +3.6% to $86.45/bbl
  • Gold: -0.9% to $5195.20/ozt
  • Copper: -1.7% to $5.851/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1601
  • GBP/USD: +0.2% to 1.3434
  • USD/CNH: UNCH at 6.8721
  • USD/JPY: +0.3% to 158.47
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 3.2%; prior 11.0%)
  • 8:30 ET: February CPI (Briefing.com consensus 0.3%; prior 0.2%) and Core CPI (Briefing.com consensus 0.2%; prior 0.3%)
  • 10:30 ET: Weekly crude oil inventories (prior +3.48 mln)
  • 14:00 ET: February Treasury Budget (Briefing.com consensus -$170.0 bln; prior -$94.6 bln)
• Treasury Auctions:
  • 13:00 ET: $39 bln 10-yr Treasury note reopening results