Bond Market Update

Rising Again

• U.S. Treasuries are on track for a higher start that will allow shorter tenors to reclaim yesterday's losses while the long bond is set to show some relative weakness at the open. Treasury futures climbed in early evening action, reaching fresh highs at the start of the European session. The advance met some resistance over the past few hours before Treasury futures returned to their overnight highs. Overnight action featured the release of some noteworthy economic reports, including in-line Q1 growth from China (1.3% qtr/qtr), solid March employment figures from Australia (17,900), and an upside surprise in the U.K.'s GDP report for February (0.5%). The U.S. session will feature the Philadelphia Fed survey (Briefing.com consensus 12.7; prior 18.1) for April and March Industrial Production (Briefing.com consensus 0.1%; prior 0.2%). The market will also receive the latest weekly Initial Claims report (Briefing.com consensus 215,000; prior 219,000). Crude oil hovers just above $91.50/bbl while the U.S. Dollar Index is up 0.1% at 98.16.
• Yield Check:
  • 2-yr: -2 bps to 3.75%
  • 3-yr: -2 bps to 3.76%
  • 5-yr: -3 bps to 3.87%
  • 10-yr: -1 bp to 4.27%
  • 30-yr: UNCH at 4.89%

• News:
  • China's President Xi pledged to increase cooperation with Russia after meeting with Russia's Foreign Minister Lavrov. Russia's President Putin is expected to visit China in late May.
  • European Central Bank officials are reportedly skeptical about an April rate hike due to little evidence of knock-on effects from the energy price spike.
  • The European Banking Authority noted that private credit does not pose a systemic risk to banks in the EU.
  • China's Q1 GDP expanded 1.3% qtr/qtr, as expected (last 1.2%), growing 5.0% yr/yr (expected 4.8%; last 4.5%). March Fixed Asset Investment rose 1.7% yr/yr (expected 1.9%; last 1.8%), March Industrial Production increased 5.7% yr/yr (expected 5.4%; last 6.3%), March House Prices fell 3.4% yr/yr (last -3.2%), and March Retail Sales rose 1.7% yr/yr (expected 2.4%; last 2.8%).
  • Australia's April MI Inflation Expectations accelerated to 5.9% from 5.2%. March Employment increased by 17,900 (expected 19,100; last 49,700) and full employment increased by 52,500 (last -27,700). March Unemployment Rate remained at 4.3%, as expected, and March Participation Rate dipped to 66.8% from 66.9% (expected 66.9%).
  • Eurozone's March CPI was up 1.3% m/m (expected 1.2%; last 0.6%), rising 2.6% yr/yr (expected 2.5%; last 1.9%). March Core CPI was up 2.3% yr/yr, as expected (last 2.4%).
  • U.K.'s February GDP expanded 0.5% m/m (expected 0.1%; last 0.1%), February Manufacturing Production decreased 0.1% m/m (expected 0.3%; last 0.2%), falling 0.5% yr/yr (expected -0.3%; last 1.3%). February Industrial Production rose 0.5% m/m (expected 0.3%; last -0.1%) but was down 0.4% yr/yr (expected -0.9%; last 0.5%). February Construction Output rose 1.0% m/m (expected -0.4%; last 0.5%) but was down 1.0% yr/yr (expected -0.4%; last -1.9%). February trade deficit reached GBP18.79 bln (expected deficit of GBP19.40 bln; last deficit of GBP15.08 bln).
  • Italy's March CPI was up 0.5% m/m, as expected (last 0.7%), rising 1.7% yr/yr, as expected (last 1.5%).
  • Swiss March PPI was up 0.2% m/m (expected 0.5%; last -0.3%), falling 2.7% yr/yr (last -2.7%).
• Commodities:
  • WTI Crude: +0.2% to $91.46/bbl
  • Gold: +0.3% to $4839.80/ozt
  • Copper: -0.1% to $6.079/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1783
  • GBP/USD: -0.1% to 1.3548
  • USD/CNH: +0.1% to 6.8205
  • USD/JPY: UNCH at 158.96
• Data out Today:
  • 8:30 ET: April Philadelphia Fed survey (Briefing.com consensus 12.7; prior 18.1), weekly Initial Claims (Briefing.com consensus 215,000; prior 219,000), and Continuing Claims (prior 1.794 mln)
  • 9:15 ET: March Industrial Production (Briefing.com consensus 0.1%; prior 0.2%) and Capacity Utilization (Briefing.com consensus 76.4%; prior 76.3%)
  • 10:30 ET: Weekly natural gas inventories (prior +50 bcf)