Bond Market Update

Struggling to Escape Pressure

• U.S. Treasuries are on track for a modestly lower start after a night that saw some pressure on other sovereign debt while oil climbed toward $98/bbl before reversing. Treasury futures faced some early pressure, diving to lows around 20:00 ET, alongside a brief spike in the price of oil above $97/bbl. Both moves were largely reversed in short order with the market guessing that the moves followed renewed military action against Iran, but that speculation was never confirmed. Treasury futures faced a bit more pressure as the night went on, eventually returning toward the midpoint of their overnight range. Overnight action saw the release of flash Manufacturing and Services PMI readings for April with Japan seeing an unexpected acceleration in Manufacturing (54.9 from 51.6) while Australia's Manufacturing (51.0 from 49.8) and Services (50.3 from 46.3) readings also improved. In Europe, flash April Manufacturing PMI readings from the region showed an acceleration in activity but Services PMI readings from Germany (46.9) and France (46.5) pointed to contracting activity. Crude oil hovers near $94/bbl while the U.S. Dollar Index is up 0.2% at 98.78.
• Yield Check:
  • 2-yr: +1 bp to 3.80%
  • 3-yr: +1 bp to 3.82%
  • 5-yr: +1 bp to 3.93%
  • 10-yr: +2 bps to 4.31%
  • 30-yr: +1 bp to 4.91%

• News:
  • Bank Indonesia made no policy changes, keeping its policy rate at 4.75%.
  • New Zealand's Treasury sees the potential for FY25/26 inflation reaching 7.4% in a worst-case scenario.
  • The U.K.'s Debt Management Office lowered its FY27 debt issuance forecast to GBP246.2 bln from GBP252.1 bln.
  • Japan's flash April Manufacturing PMI hit 54.9 (expected 51.1; last 51.6) and flash Services PMI hit 51.2 (last 53.4).
  • South Korea's April Consumer Confidence fell to 99.2 from 107.3. Q1 GDP expanded 1.7% qtr/qtr (expected 1.0%; last -0.2%), growing 3.6% yr/yr (expected 2.7%; last 1.6%).
  • Hong Kong's March CPI was unchanged m/m (last 0.5%), rising 1.7% yr/yr (last 1.7%). March Unemployment Rate fell to 3.7% from 3.8%.
  • Singapore's March CPI was up 0.5% m/m (last 0.6%), rising 1.8% yr/yr (last 1.2%). Core CPI was up 1.7% yr/yr (last 1.4%).
  • India's flash April Manufacturing PMI hit 55.9 (last 53.9) and flash Services PMI hit 57.9 (last 57.5).
  • Australia's flash April Manufacturing PMI hit 51.0 (last 49.8) and flash Services PMI hit 50.3 (last 46.3).
  • New Zealand's March Credit Card Spending was up 2.1% yr/yr (last 1.1%).
  • Eurozone's flash April Manufacturing PMI hit 52.2 (expected 50.9; last 51.6) and flash Services PMI hit 47.4 (expected 49.8; last 50.2).
  • Germany's flash April Manufacturing PMI hit 51.2 (expected 51.4; last 52.2) and flash Services PMI hit 46.9 (expected 50.4; last 50.9).
  • U.K.'s March Public Sector Net Borrowing reached GBP12.60 bln (expected GBP10.40 bln; last -GBP12.80 bln). Flash April Manufacturing PMI hit 53.6 (expected 50.3; last 51.0) and flash Services PMI hit 52.0 (expected 50.0; last 50.5). April CBI Industrial Trends Orders fell to -38 from -27 (expected -34).
  • France's April Business Survey rose to 100 from 99 (expected 99). April Manufacturing PMI hit 52.8 (expected 49.5; last 50.0) and Services PMI hit 46.5 (expected 48.5; last 48.8).
• Commodities:
  • WTI Crude: +0.8% to $93.69/bbl
  • Gold: -0.7% to $4721.10/ozt
  • Copper: -1.5% to $6.036/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1695
  • GBP/USD: +0.1% to 1.3508
  • USD/CNH: UNCH at 6.8321
  • USD/JPY: +0.1% to 159.51
• Data out Today:
  • 8:30 ET: Weekly Initial Claims (Briefing.com consensus 212,000; prior 207,000), Continuing Claims (prior 1.818 mln)
  • 9:45 ET: Flash S&P Global U.S. Manufacturing PMI (prior 52.3) and flash S&P Global U.S. Services PMI (prior 49.8)
  • 10:30 ET: Weekly natural gas inventories (prior +59 bcf)