Bond Market Update

Bounce in Progress

• U.S. Treasuries are on track for a higher start after yesterday's retreat lifted yields on the 5-yr note and shorter tenors to fresh highs for the year. Treasury futures climbed shortly after yesterday's cash close, but the gains were erased near the end of the Asian session. However, a swift bounce has returned action to overnight highs. The overnight session saw weakness in most global equity markets amid ongoing worries about energy prices, though crude oil is modestly lower this morning. Elsewhere, the Japanese yen reached its lowest level against the dollar since July 2024, prompting Finance Minister Katayama to say that she is in close contact with her counterparts in the U.S. Economic data released overnight included a flat January GDP report from the U.K., which raised fears of stagflation in the British economy. Crude oil is back below $95/bbl while the U.S. Dollar Index is up 0.4% at 100.15.
• Yield Check:
  • 2-yr: -6 bps to 3.70%
  • 3-yr: -6 bps to 3.72%
  • 5-yr: -4 bps to 3.84%
  • 10-yr: -2 bps to 4.25%
  • 30-yr: UNCH at 4.89%

• News:
  • U.S. Trade Representative Greer will join Treasury Secretary Bessent for next week's meetings with China's Vice Premier He.
  • India is seeing urea from China while South Korea will limit exports of naphtha products.
  • China's February New Loans reached CNY900.0 bln (last CNY4.71 trln) and total social financing reached CNY2.38 trln (last CNY7.22 trln)
  • Hong Kong's Q4 Industrial Production was up 5.7% yr/yr (last 5.4%).
  • New Zealand's February Business PMI hit 55.0 (expected 55.1). January External Migration & Visitors rose 4.1% yr/yr (last 1.6%).
  • Eurozone's January Industrial Production was down 1.5% m/m (expected 0.6%; last -0.6%), falling 1.2% yr/yr (expected 1.4%; last 2.2%).
  • Germany's February WPI was up 0.6% m/m (expected 0.3%; last 0.9%), rising 1.2% yr/yr (last 1.2%)
  • U.K.'s January GDP was unchanged m/m (expected 0.2%; last 0.1%), growing 0.8% yr/yr (expected 0.9%; last 0.7%). January Industrial Production was down 0.1% m/m (expected 0.3%; last -0.9%) but up 0.4% yr/yr (expected 0.6%; last 0.5%). January Manufacturing Production was up 0.1% m/m (expected 0.2%; last -0.5%), rising 1.3% yr/yr (expected 1.5%; last 0.5%). January Construction Output was up 0.2% m/m (expected 0.0%; last -0.5%) but down 0.2% yr/yr (expected -0.1%; last -0.3%). January trade deficit reached GBP14.45 bln (expected deficit of GBP22.20 bln; last deficit of GBP10.99 bln).
  • France's February CPI was up 0.6% m/m (expected 0.7%; last -0.4%), rising 1.1% yr/yr, as expected (last 0.4%).
  • Italy's January Industrial Production was down 0.6% m/m (expected 0.4%; last -0.5%), falling 0.6% yr/yr (expected 0.8%; last 2.7%).
  • Spain's February CPI was up 0.4% m/m, as expected (last -0.4%), rising 2.3% yr/yr, as expected (last 2.3%). February Core CPI was up 2.7% yr/yr, as expected (last 2.6%).
• Commodities:
  • WTI Crude: -1.7% to $94.09/bbl
  • Gold: -0.5% to $5101.00/ozt
  • Copper: -1.1% to $5.805/lb
• Currencies:
  • EUR/USD: -0.4% to 1.1469
  • GBP/USD: -0.6% to 1.3260
  • USD/CNH: +0.2% to 6.8928
  • USD/JPY: UNCH at 159.30
• Data out Today:
  • 8:30 ET: January Personal Income (Briefing.com consensus 0.4%; prior 0.3%), Personal Spending (Briefing.com consensus 0.2%; prior 0.4%), PCE Prices (Briefing.com consensus 0.3%; prior 0.4%), Core PCE Prices (Briefing.com consensus 0.4%; prior 0.4%), Q4 GDP -- second estimate (Briefing.com consensus 1.4%; prior 1.4%), Q4 GDP Deflator -- second estimate (Briefing.com consensus 3.7%; prior 3.6%), January Durable Orders (Briefing.com consensus 0.7%; prior -1.4%), and Durable Orders -ex transportation (Briefing.com consensus 0.5%; prior 0.9%)
  • 10:00 ET: January job openings (prior 6.542 mln) and preliminary March University of Michigan Consumer Sentiment (Briefing.com consensus 55.7; prior 56.6)