Bond Market Update

 Inching Lower

• U.S. Treasuries are on track for a modestly lower start after yesterday's selling lifted yields to fresh highs for the month. Treasury futures began retreating after yesterday's cash close, hitting lows in early evening trade, followed by a slow rise through the night. The market continues trading above overnight lows, but all tenors remain on course for a lower start. Overnight action saw renewed pressure on equities as oil climbed amid reports of attacks on tankers in the Persian Gulf. In addition, the market remains eager to see how much oil will be released per day after the IEA announced an agreement to release 400 million barrels yesterday. In other news, U.S. Trade Representative Greer said that a section 301 investigation into 16 trading partners has started. That investigation is expected to result in a replacement of IEEPA tariffs. The market will receive a sizable batch of data this morning, including January Housing Starts (Briefing.com consensus 1.340 mln; prior 1.404 mln) and Building Permits (Briefing.com consensus 1.392 mln; prior 1.448 mln) while the U.S. Treasury will hold a $22 bln 30-yr bond reopening this afternoon. Crude oil has climbed back above $90/bbl while the U.S. Dollar Index is up 0.1% at 99.32.
• Yield Check:
  • 2-yr: +1 bp to 3.64%
  • 3-yr: +1 bp to 3.66%
  • 5-yr: +1 bp to 3.79%
  • 10-yr: +1 bp to 4.22%
  • 30-yr: +2 bps to 4.88%

• News:
  • Japan will release 80 million barrels from state and private reserves and Prime Minister Takaichi said that there is no need for an extra budget to offset higher gasoline prices.
  • Japan's Q1 BSI Large Manufacturing Conditions fell to 3.8 from 4.7 (expected 5.3).
  • Australia's May MI Inflation Expectations rose to 5.2% from 5.0%.
  • New Zealand's Q4 Manufacturing Sales Volume was down 0.5% qtr/qtr (last 1.1%).
  • India's February CPI was up 3.21% yr/yr (expected 3.10%; last 2.75%).
  • Italy's Q4 Unemployment Rate fell to 5.6% from 6.1% (expected 6.1%).
• Commodities:
  • WTI Crude: +5.2% to $91.78/bbl
  • Gold: +0.1% to $5184.30/ozt
  • Copper: -0.1% to $5.887/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1553
  • GBP/USD: -0.1% to 1.3395
  • USD/CNH: -0.1% to 6.8669
  • USD/JPY: -0.1% to 158.71
• Data out Today:
  • 8:30 ET: January Housing Starts (Briefing.com consensus 1.340 mln; prior 1.404 mln) and Building Permits (Briefing.com consensus 1.392 mln; prior 1.448 mln), January Trade Balance (Briefing.com consensus -$67.9 bln; prior -$70.3 bln), weekly Initial Claims (Briefing.com consensus 215,000; prior 213,000), and Continuing Claims (prior 1.868 mln)
  • 10:00 ET: January Factory Orders (prior -0.7%)
  • 10:30 ET: Weekly natural gas inventories (prior -132 bcf)
• Treasury Auctions:
  • 13:00 ET: $22 bln 30-yr Treasury bond reopening results