Bond Market Update

Bounce Extended

• U.S. Treasuries are on track for a modestly higher start, seeking an upbeat finish to a month that saw yields jump from 2026 lows to highs. Treasury futures began climbing in evening trade, reaching their best levels shortly after the start of the European session followed by some backtracking. There was some geopolitical optimism after President Trump said that he is considering ending the Iran war without reopening the Strait of Hormuz. In other overnight news, China's official Manufacturing (50.4) and Non-Manufacturing PMI (50.1) readings returned to expansion in March while economic data from Europe showed weak February Consumer Spending in France (-1.4% m/m; expected -0.3%) and cooler than expected flash March CPI from the eurozone (2.5% yr/yr; expected 2.6%). The U.S. session will see the release of a couple housing-related data points, followed by March Consumer Confidence (Briefing.com consensus 88.0; prior 91.2) at 10:00 ET. Crude oil is rising toward $105/bbl while the U.S. Dollar Index is down 0.1% at 100.38.
• Yield Check:
  • 2-yr: -4 bps to 3.79%
  • 3-yr: -5 bps to 3.81%
  • 5-yr: -5 bps to 3.93%
  • 10-yr: -4 bps to 4.30%
  • 30-yr: -3 bps to 4.88%

• News:
  • China's liquor giant Kweichow Moutai announced price hikes.
  • South Korea is planning an extra budget of KRW26.2 trln to offset the impact of the war with Iran.
  • Germany's Economic Institutes lowered their domestic growth outlook for 2026 to 0.6% from 1.3% while the forecast for 2027 was reduced to 0.9% from 1.4%. The inflation forecast for 2026 was increased to 2.8% from 2.0% while the outlook for 2027 was increased to 2.8% from 2.3%.
  • European Central Bank policymaker Muller said that it is probable that rates will have to rise in the coming quarters while policymaker Kazimir said that the central bank will need to act decisively if the Iran war drags on.
  • China's March Manufacturing PMI hit 50.4 (expected 50.1; last 49.0) and Non-Manufacturing PMI hit 50.1 (expected 49.9; last 49.5).
  • Japan's February Retail Sales were down 0.2% yr/yr (expected 0.9%; last 1.8%), February Industrial Production fell 2.1% m/m, as expected (last 4.3%), February Unemployment Rate dipped to 2.6% from 2.7% (expected 2.7%), March Tokyo CPI was up 1.4% yr/yr (last 1.6%) and March Tokyo Core CPI was up 1.7% yr/yr (expected 1.8%; last 1.8%). February Housing Starts fell 4.9% yr/yr (expected -4.5%; last -0.4%) and Construction Orders were up 42.7% yr/yr (last 5.7%).
  • South Korea's February Retail Sales were unchanged m/m (last 2.9%). February Industrial Production rose 5.4% m/m (expected 1.8%; last -2.4%) but was down 2.2% yr/yr (expected 6.0%; last 6.8%). February Service Sector Output rose 0.5% m/m (last -0.2%). · India's Q3 trade deficit reached $87.40 bln (last deficit of $93.60 bln). 
  • Singapore's February Bank Lending reached SGD893.6 bln (last SGD887.5 bln).
  • Australia's March Private Sector Credit rose 0.6% m/m, as expected (last 0.5%) and March Housing Credit was up 0.6% m/m (last 0.6%).
  • New Zealand's March ANZ Business Confidence fell to 32.5 from 59.2.
  • Eurozone's flash March CPI was up 1.2% m/m (last 0.6%), rising 2.5% yr/yr (expected 2.6%; last 1.9%). March Core CPI was up 0.8% m/m (last 0.8%), rising 2.3% yr/yr (expected 2.4%; last 2.4%).
  • Germany's February Retail Sales rose 0.7% yr/yr (expected 1.0%; last 0.9%). February Import Price Index was up 0.3% m/m (expected 0.7%; last 1.1%) but down 2.3% yr/yr (last -2.3%). March Unemployment was unchanged (expected 2,000; last 1,000) and March Unemployment Rate remained at 6.3%, as expected.
  • U.K.'s Q4 GDP expanded 0.1% qtr/qtr, as expected (last 0.1%), growing 1.0% yr/yr, as expected (last 1.2%). Q4 Business Investment was down 2.5% qtr/qtr (expected -2.7%; last 1.1%), Q4 Current Account deficit reached GBP18.4 bln (expected deficit of GBP24.0 bln; last deficit of GBP10.7 bln). March Nationwide HPI was up 0.9% m/m (expected 0.0%; last 0.3%), rising 2.2% yr/yr (last 1.0%). Q4 Business Investment was up 2.0% yr/yr, as expected (last 3.5%).
  • France's flash March CPI was up 0.9% m/m, as expected (last 0.6%), rising 1.7% yr/yr (expected 1.6%; last 0.9%). February PPI was down 0.2% m/m, as expected (last 0.5%), falling 2.4% yr/yr (last -2.3%). February Consumer Spending was down 1.4% m/m (expected -0.3%; last 0.4%).
  • Italy's flash March CPI was up 0.5% m/m (expected 0.6%; last 0.7%), rising 1.7% yr/yr (last 1.5%). January Industrial Sales fell 0.3% m/m (last 0.6%), dropping 1.0% yr/yr (last 3.5%).
  • Spain's January Current Account surplus reached EUR2.73 bln (last surplus of EUR1.80 bln).
• Commodities:
  • WTI Crude: +0.6% to $103.45/bbl
  • Gold: +1.3% to $4616.20/ozt
  • Copper: +0.5% to $5.530/lb
• Currencies:
  • EUR/USD: +0.2% to 1.1486
  • GBP/USD: +0.4% to 1.3229
  • USD/CNH: -0.1% to 6.9069
  • USD/JPY: -0.2% to 159.45
• Data out Today:
  • 9:00 ET: 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%)
  • 9:45 ET: March Chicago PMI (Briefing.com consensus 54.8; prior 57.7)
  • 10:00 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)