Bond Market Update

Testing Recent Optimism

• U.S. Treasuries are on track for a modestly lower start after a weekend that saw renewed uncertainty surrounding the U.S.-Iran conflict. Friday's optimism was challenged over the weekend, as Iran's navy continued limit traffic through the Strait of Hormuz. A U.S. delegation was expected to meet with Iranian officials in Pakistan today, but that meeting has yet to take place. Economic data released overnight was on the light side, leaving the overall focus on the Iran conflict. The U.S. session will be free of economic data today and this week's overall domestic data flow will be on the light side. Crude oil is back above $85/bbl, nearing $90/bbl, while the U.S. Dollar Index is up 0.1% at 98.18.
• Yield Check:
  • 2-yr: +3 bps to 3.73%
  • 3-yr: +2 bps to 3.74%
  • 5-yr: +2 bps to 3.86%
  • 10-yr: +1 bp to 4.26%
  • 30-yr: UNCH at 4.89%

• News:
  • The People's Bank of China left its one-year and five-year loan prime rates at their respective 3.00% and 3.50%.
  • The approval rating of Japan Prime Minister Takaichi's cabinet fell to 66% from 71%.
  • The Senate Banking Committee will consider Kevin Warsh's Fed chairman nomination on Wednesday.
  • European Central Bank policymaker Demarco said that the central bank should wait a bit longer before raising rates, adding that bets on two rate hikes are not unreasonable.
  • Moody's lowered Belgium's rating to A1 from Aa3, revising the outlook to Stable from Negative.
  • DBRS reaffirmed Italy's A rating with a Stable trend.
  • Japan's February Tertiary Industry Activity Index rose to -0.7 from -8.7.
  • New Zealand's March trade surplus reached NZD698 mln (expected surplus of NZD175 mln; last deficit of NZD365 mln).
  • Eurozone's February Construction Output was down 1.9% m/m (last -1.33%).
  • Germany's March PPI was up 2.5% m/m (expected 1.4%; last -0.5%) but down 0.2% yr/yr (last -3.3%).
• Commodities:
  • WTI Crude: +5.5% to $88.48/bbl
  • Gold: -1.2% to $4823.20/ozt
  • Copper: -1.5% to $6.023/lb
• Currencies:
  • EUR/USD: UNCH at 1.1766
  • GBP/USD: UNCH at 1.3517
  • USD/CNH: UNCH at 6.8155
  • USD/JPY: +0.2% to 158.84
• No Data on Today's Schedule