Bond Market Update

Drifting Lower

• U.S. Treasuries saw yields drift lower in the overnight trade, even as oil prices were rising. Participants will be keen to see if both trades last as the cash session unfolds. That session will feature the February Pending Home Sales Index at 10:00 a.m. ET and the $13 billion 20-yr bond reopening at 1:00 p.m. ET. Undoubtedly, it will also feature many updates about developments in Iran, the latest of which include reports that Iran's top security official, Ali Larijani, has been killed and that there has been a slow uptake on President Trump's aim to form an allied coalition to help tankers get through the Strait of Hormuz. In related news, the U.S. has asked China to delay the Trump-Xi summit by a month or so due to the Iran war. Separately, the Reserve Bank of Australia raised its cash rate by 25 bps to 4.10%, as expected, in a close 5-4 vote.
• Yield Check:
  • 2-yr: -2 bps to 3.66%
  • 3-yr: -2 bps to 3.67%
  • 5-yr: -1 bp to 3.79%
  • 10-yr: -1 bp to 4.21%
  • 30-yr: +1 bp to 4.87%

• News:
  • President Trump said the U.S. has asked China to delay his meeting with President Xi by a month or so because of his need to attend to the war with Iran
  • Germany, Japan, and Australia are unlikely to help with the Strait of Hormuz, but the UK and France are assessing possible action. WSJ
  • Israel killed Iran security chief Ali Larijani. NBC News
  • As expected, the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.10%, but it was a close 5-4 vote
  • Eurozone's March ZEW Economic Sentiment -8.5 (expected 26.5; prior 39.4)
• Commodities:
  • WTI Crude: +3.1% to $96.44/bbl
  • Gold: +0.2% to $5012.50/ozt
  • Copper: -1.1% to $5.77/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1514
  • GBP/USD: +0.1% to 1.3337
  • USD/CNH: flat at 6.8871
  • USD/JPY: flat at 159.00
• The Day Ahead:
  • 10:00 ET: February Pending Home Sales Index (Briefing.com consensus: -0.8%; prior -0.8%)
  • 13:00 ET: $13 billion 20-yr bond reopening