Bond Market Update

 Bounce Taking Shape

• U.S. Treasuries are on track for a higher start that will help the complex recover a portion of its losses from yesterday. Treasury futures inched higher in early evening trade, accelerating their advance once the focus turned to action in Europe. Iran-related uncertainty has persisted, though President Trump extended the ceasefire agreement that was due to expire tonight. This has offered some encouragement to the market, which remains hopeful that the conflict will end soon. Economic data released overnight showed hotter-than-expected March CPI from the U.K. while South Korea's producer prices increased at their fastest pace in three years due to the recent surge in energy prices. The U.S. session will be free of top-tier data, but the U.S. Treasury will hold a $13 bln 20-yr Treasury bond reopening this afternoon. Crude oil hovers near $90/bbl while the U.S. Dollar Index is flat at 98.38.
• Yield Check:
  • 2-yr: -2 bps to 3.76%
  • 3-yr: -2 bps to 3.77%
  • 5-yr: -3 bps to 3.88%
  • 10-yr: -2 bps to 4.27%
  • 30-yr: -2 bps to 4.88%

• News:
  • Expectations for a May rate hike from the Reserve Bank of New Zealand increased to about 50% after yesterday's release of the second consecutive above-target CPI reading.
  • Travel operator TUI lowered its guidance due to increased energy prices and war-related uncertainty.
  • Lufthansa is scrapping about 20,000 short-haul flights through October due to a tight supply of jet fuel.
  • Japan's March trade surplus reached JPY90 bln (expected surplus of JPY230 bln; last deficit of JPY370 bln) as imports grew 10.9% yr/yr (expected 7.1%; last 10.3%) and exports rose 11.7% yr/yr (expected 11.0%; last 4.0%).
  • South Korea's March PPI was up 1.6% m/m (last 0.6%), rising 4.1% yr/yr (last 2.5%).
  • Australia's March MI Leading Index was down 0.1% m/m (last -0.1%).
  • Eurozone's 2025 debt-to-GDP ratio increased to 87.8% from 87.0% and 2025 budget-to-GDP ratio ticked up to -2.9% from -3.0%.
  • U.K.'s March CPI was up 0.7% m/m (expected 0.6%; last 0.4%), rising 3.3% yr/yr, as expected (last 3.0%). March Input PPI was up 4.4% m/m (expected 2.8%; last 0.9%), rising 5.4% yr/yr (last 0.7%). Output PPI was up 0.9% m/m (expected 1.0%; last -0.5%), rising 2.6% yr/yr (last 1.8%). March Core CPI was up 0.4% m/m (expected 0.5%; last 0.6%), rising 3.1% yr/yr (expected 3.2%; last 3.2%).
• Commodities:
  • WTI Crude: +0.3% to $89.88/bbl
  • Gold: +1.1% to $4770.80/ozt
  • Copper: +0.7% to $6.05/lb
• Currencies:
  • EUR/USD: UNCH at 1.1735
  • GBP/USD: UNCH at 1.3504
  • USD/CNH: +0.1% to 6.8277
  • USD/JPY: -0.1% to 159.22
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual 7.9%; prior 1.8%)
  • 10:30 ET: Weekly crude oil inventories (prior -913,000)
• Treasury Auctions:
  • 13:00 ET: $13 bln 20-yr Treasury bond reopening results