Bond Market Update

Bumpy Start Ahead

• U.S. Treasuries are on track for a mixed start after a night that saw selling in global equity markets amid ongoing Iran-related uncertainty. Treasury futures retreated during the Asian session, falling alongside equity markets amid building concerns about the ongoing conflict with Iran. President Trump gave Iran 48 hours to fully open the Strait of Hormuz or face attacks on its energy infrastructure over the weekend. However, the president said this morning that discussions with Iran are being held, which gave the market a glimmer of hope that a resolution to the conflict may be near. That acknowledgement drove a sharp bounce in Treasury futures while equity futures also rallied, recovering their big overnight losses. The focus on the conflict with Iran dominated the overnight session while the data flow was on the light side. Crude oil is down more than $7/bbl, falling toward $90/bbl after President Trump's acknowledgement that talks are being held. The U.S. Dollar Index is down 0.3% at 99.34.
• Yield Check:
  • 2-yr: +2 bps to 3.91%
  • 3-yr: +1 bp to 3.92%
  • 5-yr: UNCH at 4.01%
  • 10-yr: -1 bp to 4.38%
  • 30-yr: -3 bps to 4.93%

• News:
  • Singapore's February CPI was up 0.6% m/m (last -0.5%), rising 1.2% yr/yr (last 1.4%). February Core CPI was up 1.4% yr/yr (last 1.0%).
  • Taiwan's February exports to the U.S. were up 24% yr/yr while exports to Japan grew 18% yr/yr.
  • Japan will spend about JPY800 bln to offset high gasoline prices.
  • South Korea's President Lee nominated Shin Hyun-song to be the next governor of the Bank of Korea.
  • Spain's January trade deficit reached EUR4.00 bln (last deficit of EUR5.57 bln).
  • Municipal elections in France produced some gains for National Rally.
  • Germany has maintained its debt issuance plans for Q2.
  • European Central Bank policymaker Kazimir said that rates remain in good place while policymaker De Guindos said that the central bank will react if necessary.
• Commodities:
  • WTI Crude: -7.0% to $91.31/bbl
  • Gold: -3.5% to $4413.50/ozt
  • Copper: +2.1% to $5.483/lb
• Currencies:
  • EUR/USD: +0.1% to 1.1575
  • GBP/USD: +0.3% to 1.3376
  • USD/CNH: -0.1% to 6.8956
  • USD/JPY: -0.3% to 158.79
• Data out Today: 
  • 10:00 ET: January Construction Spending (Briefing.com consensus 0.1%; prior 0.3%)