Bond Market Update

Oil Prices Down, Bond Prices Up

• U.S. Treasuries found a bid, catalyzed in part by a relief trade rooted in the recognition that oil prices have been held in check despite the U.S. bombing military targets on Kharg Island, Iran's most important oil hub. WTI crude futures are down 1.4% to $97.34/bbl. That move has been helped by reports that the Trump administration is working on coordinating an allied coalition to help provide safe transport for oil tankers through the Strait of Hormuz. Markets, though, remain jittery about the conflict, so one should expect ongoing volatility. There will be 16 central bank decisions this week, featuring updates from the Fed, ECB, Bank of England, Swiss National Bank, and Bank of Japan.
• Yield Check:
  • 2-yr: -4 bps to 3.69%
  • 3-yr: -4 bps to 3.71%
  • 5-yr: -4 bps to 3.83%
  • 10-yr: -4 bps to 4.25%
  • 30-yr: -3 bps to 4.88%

• News:
  • The Trump administration plans to announce a multi-country coalition that will escort ships through the Strait of Hormuz. The announcement could be made this week. WSJ
  • President Trump in an interview says Iran is ready to negotiate a ceasefire, but he is not ready to make a deal because "the terms aren't good enough yet." He also said he is working with countries to secure the Strait of Hormuz. NBC News
  • Iranian Foreign Minister Abbas Araghchi says he is open to "any regional initiative" to end war, but no specific proposal has been made. Bloomberg
  • The U.S. attacked military sites on Iran's Kharg Island, and President Trump warned oil infrastructure on the island will be targeted unless the Strait of Hormuz is reopened. Iran threatened to attack oil facilities in the Middle East if Kharg oil infrastructure is targeted. Pentagon deploying 5,000 additional Marines and sailors to the Middle East. NBC News
  • Energy Secretary Chris Wright, in an interview, says the Iran war will "certainly come to an end in the next few weeks." He thinks the Strait of Hormuz will be opened in the "not too distant future." ABC News
  • President Trump might delay the summit with Chinese President Xi due to the Iran war. FT
  • Airlines urge Congress to fund DHS as airport disruptions continue. Reuters
  • FCC Chair Brendan Carr, in an interview, says broadcast licenses could be revoked over news coverage. CBS News
  • The Commerce Department plans to withdraw the rule on AI exports. Reuters
  • This week will feature 16 central bank policy decisions, including updates from the Fed, ECB, Bank of England, Swiss National Bank, and Bank of Japan
  • Finance ministers from Japan and South Korea issued a joint statement on defending their currencies from excessive weakness
  • February Chinese Industrial Production 6.3% yr/yr (expected 5.3%; last 5.2%); February Retail Sales 2.8% yr/yr (expected 2.6%; last 0.9%); February Fixed Asset Investment 1.8% yr/yr (expected -5.0%; last -3.8%)
• Commodities:
  • WTI Crude: -1.4% to $97.34/bbl
  • Gold: -0.8% to $5021.90/ozt
  • Copper: +0.1% to $5.77/lb
• Currencies:
  • EUR/USD: +0.6% to 1.1486
  • GBP/USD: +0.4% to 1.3283
  • USD/CNH: -0.2% to 6.8915
  • USD/JPY: -0.4% to 159.11
• Data out Today:
  • 08:30 ET: March Empire Manufacturing (Briefing.com consensus 0.5; prior 7.1)
  • 09:15 ET: February Industrial Production (Briefing.com consensus: 0.4%; prior 0.7%) and Capacity Utilization (Briefing.com consensus: 76.0%; prior 76.2%)