Bond Market Update

Mixed Finish to Volatile Week

• U.S. Treasuries had a mixed showing on Friday, which returned longer and shorter tenors to little changed for the week that saw fresh 2026 highs in yields across the curve. The trading day started with losses across the curve and relative weakness in longer tenors after a night of selling in global sovereign debt and most equity markets. There was an ongoing sense of Iran-related unease going into the weekend after it was reported that the Pentagon is sending additional troops to the region. That said, President Trump indicated that he will delay strikes on Iran's energy infrastructure by another few days to make room for negotiations. Treasuries widened their starting losses during the first few minutes of action but bounced shortly after 2-yr yield briefly climbed above a high that was set just before Monday's cash open. The 2-yr note remained at the forefront of the rebound into the afternoon, finishing on its high while the long bond lagged after outperforming earlier this week, finishing near its starting level. The advance up front helped the 2-yr note erase the bulk of this week's loss while the long bond turned negative for the week during today's retreat. The yield curve steepened a touch this week with the 2s10s spread expanding by two basis points to 52 bps. Crude oil finished the week just shy of $100/bbl while the U.S. Dollar Index rose 0.3% to 100.15, adding 0.7% for the week.
• Yield Check:
  • 2-yr: -6 bps to 3.92% (+3 bps this week)
  • 3-yr: -5 bps to 3.94% (+3 bps this week)
  • 5-yr: -3 bps to 4.07% (+6 bps this week)
  • 10-yr: +2 bps to 4.44% (+5 bps this week)
  • 30-yr: +5 bps to 4.98% (+2 bps this week)

• News:
  • President Trump ordered the Department of Homeland Security to pay TSA agents.
  • The Fed is expected to reduce its purchases of Treasury bills after the April 15 tax deadline.
  • Japan's Finance Minister Katayama warned about a potential intervention in the currency market after the yen approached 160/dollar, its weakest level since mid-2024.
  • The Japanese government confirmed a provisional budget of JPY8.6 trln.
  • China has yet to confirm the rescheduled mid-May meeting between Presidents Trump and Xi.
  • China imposed a 55% additional tariff on beef imports from Australia.
  • China's February Industrial Profit was up 15.2% YTD (last 0.6%).
  • U.K.'s February Retail Sales were down 0.4% m/m (expected -0.6%; last 2.0%) but up 2.5% yr/yr (expected 2.1%; last 4.8%). February Core Retail Sales were down 0.4% m/m (expected -0.8%; last 2.2%) but up 3.4% yr/yr (expected 2.9%; last 5.9%).
  • Italy's February non-EU trade surplus reached EUR5.53 bln (last surplus of EUR2.23 bln).
  • Spain's flash March CPI was up 1.0% m/m (expected 1.2%; last 0.4%), rising 3.3% yr/yr (expected 3.6%; last 2.3%). Flash March Core CPI was up 2.7% yr/yr (last 2.7%).
• Today's Data:
  • The final reading of the University of Michigan Consumer Sentiment for March fell to 53.3 (Briefing.com consensus: 55.5) from the preliminary reading of 55.5. The final reading for February was 56.6. In the same period a year ago, the index stood at 57.0.
    • The key takeaway from the report is that it conveyed large drops in sentiment among consumers with middle and higher incomes, who were dealing with rising gas prices and falling stock prices in the wake of the Iran war.
• Commodities:
  • WTI crude: +5.4% to $99.51/bbl
  • Gold: +2.6% to $4492.80/ozt
  • Copper: +0.6% to $5.50/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1512
  • GBP/USD: -0.5% to 1.3267
  • USD/CNH: UNCH at 6.9206
  • USD/JPY: +0.4% to 160.27
• The Week Ahead:
  • Monday: Nothing of note
  • Tuesday: January FHFA Housing Price Index (Briefing.com consensus 0.0%; prior 0.1%) and January S&P Case-Shiller Home Price Index (Briefing.com consensus 1.3%; prior 1.4%) at 9:00 ET; March Chicago PMI (Briefing.com consensus 54.8; prior 57.7) at 9:45 ET; February Job Openings (Briefing.com consensus 6.795 mln; prior 6.946 mln) and March Consumer Confidence (Briefing.com consensus 88.0; prior 91.2) at 10:00 ET
  • Wednesday: Weekly MBA Mortgage Index (prior -10.5%) at 7:00 ET; March ADP Employment Change (Briefing.com consensus 42,000; prior 63,000) at 8:15 ET; February Retail Sales (Briefing.com consensus 0.5%; prior -0.2%) and Retail Sales ex-auto (Briefing.com consensus 0.3%; prior 0.0%) at 8:30 ET; final March S&P Global U.S. Manufacturing PMI (prior 52.4) at 9:45 ET; March ISM Manufacturing (Briefing.com consensus 52.3%; prior 52.4%) at 10:00 ET; and weekly crude oil inventories (prior +6.93 mln) at 10:30 ET
  • Thursday: Weekly Initial Claims (Briefing.com consensus 215,000; prior 210,000), Continuing Claims (prior 1.819 mln), and February Trade Balance (Briefing.com consensus -$55.8 bln; prior -$54.5 bln) at 8:30 ET; January Business Inventories (prior 0.1%) at 10:00 ET; and weekly natural gas inventories (prior -54 bcf) at 10:30 ET
  • Friday: March Nonfarm Payrolls (Briefing.com consensus 51,000; prior -92,000), Nonfarm Private Payrolls (Briefing.com consensus 51,000; prior -86,000), Unemployment Rate (Briefing.com consensus 4.4%; prior 4.4%), Average Hourly Earnings (Briefing.com consensus 0.4%; prior 0.4%), and Average Workweek (Briefing.com consensus 34.3; prior 34.3) at 8:30 ET; Final March S&P Global U.S. Services PMI (prior 51.1) at 9:45 ET; March ISM Non-Manufacturing Index (Briefing.com consensus 54.9%; prior 56.1%) at 10:00 ET; Treasury market to close at 12:00 ET; equity markets closed all day for Good Friday