Bond Market Update

 Front End Lags

• U.S. Treasuries are on track for a slightly lower start in shorter tenors while the long end is expected to show some early relative strength. Treasury futures spent the bulk of the night in a sideways range, reaching highs around the midpoint of the Asian session, followed by a slip to fresh lows. Unlike Treasuries, most other sovereign debt has advanced while the U.K.'s gilts have lagged, sending the 10-yr gilt yield to a fresh high for the year after the unemployment rate dropped. U.S. officials are traveling to Pakistan to meet with Iranian representatives while President Trump said that he is highly unlikely to extend the ceasefire agreement that expires tomorrow. The U.S. session will feature the release of March Retail Sales (Briefing.com consensus 1.3%; prior 0.6%) and Retail Sales ex-auto (Briefing.com consensus 0.9%; prior 0.5%) at 8:30 ET, followed by February Business Inventories (Briefing.com consensus 0.1%; prior -0.1%) and March Pending Home Sales (Briefing.com consensus 0.5%; prior 1.8%) at 10:00 ET. Crude oil remains below $90/bbl while the U.S. Dollar Index is up 0.1% at 98.21.
• Yield Check:
  • 2-yr: +2 bps to 3.74%
  • 3-yr: +2 bps to 3.75%
  • 5-yr: +2 bps to 3.87%
  • 10-yr: +1 bp to 4.26%
  • 30-yr: UNCH at 4.88%

• News:
  • Fitch expects China's fiscal deficit to remain at 7.3% of GDP in 2026.
  • South Korea's exports were up 49.4% through the first 20 days of April with chip exports jumping 182.5%.
  • China Securities Journal noted that measures aimed at stabilizing the stock market have gained traction.
  • European Central Bank policymaker Rehn said that there is no set rate path and that the current starting point is "reasonably balanced" while ECB President Lagarde said that the central bank's response will be determined by the duration of the energy shock.
  • French Prime Minister Lecornu is seeking EUR4 bln in spending cuts.
  • Germany's ZEW institute noted that expectations are slipping into negative territory.
  • New Zealand's Q1 CPI was up 0.9% qtr/qtr (expected 0.8%; last 0.6%), rising 3.1% yr/yr (expected 2.9%; last 3.1%). Q1 NZIER Business Confidence fell to -4% from 48% and Q1 NZIER Capacity Utilization rose to 91.2% from 89.8%.
  • Eurozone's April ZEW Economic Sentiment fell to -20.4 from -8.5 (expected -12.7).
  • Germany's April ZEW Economic Sentiment fell to -17.2 from -0.5 (expected -6.7) and ZEW Current Conditions fell to -73.7 from -62.9 (expected -70.0).
  • U.K.'s February three-month employment increased by 25,000 (last 84,000). February Average Earnings Index + Bonus was up 3.8% yr/yr (expected 3.6%; last 4.1%). February Unemployment Rate fell to 4.9% from 5.2% (expected 5.2%) and March Claimant Count increased by 26,800 (expected 21,400; last 17,100).
  • Spain's February trade deficit reached EUR3.30 bln (last deficit of EUR4.00 bln).
  • Swiss March trade surplus reached CHF3.177 bln (last surplus of CHF4.105 bln).
• Commodities:
  • WTI Crude: -0.4% to $89.32/bbl
  • Gold: -0.3% to $4814.00/ozt
  • Copper: UNCH at $6.05/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1766
  • GBP/USD: -0.1% to 1.3518
  • USD/CNH: UNCH at 6.8155
  • USD/JPY: +0.2% to 159.08
• Data out Today:
  • 8:30 ET: March Retail Sales (Briefing.com consensus 1.3%; prior 0.6%) and Retail Sales ex-auto (Briefing.com consensus 0.9%; prior 0.5%)
  • 10:00 ET: February Business Inventories (Briefing.com consensus 0.1%; prior -0.1%) and March Pending Home Sales (Briefing.com consensus 0.5%; prior 1.8%)