Bond Market Update

Midweek Losses Extended

• U.S. Treasuries could not escape selling pressure on Thursday, but intraday resilience helped the complex finish only a bit below its starting levels. The trading day started with slim losses across the curve after Wednesday evening saw a sudden spike in the price of oil, which also invited selling in Treasury and equity futures. There was some speculation that renewed military action against Iran is responsible for the sudden moves, but that was never confirmed. Oil retraced the bulk of the spike in short order, but investors remained on edge for potential headline shock. Treasuries climbed off their starting levels, finding some mid-morning support near their flat lines with help from a CCTV report that preparations are being made for a Friday meeting between officials from U.S. and Iran. The market got knocked to fresh lows in the early afternoon amid a smattering of reports that again made it seem like attacks on Iran are resuming, but the losses were narrowed after reports to the contrary crossed the wires. The bumpy session ended with losses across the complex with yields on the 10-yr note and shorter tenors ending at ten-day highs. Crude oil climbed toward $96/bbl while the U.S. Dollar Index rose 0.2% to 98.77.
• Yield Check:
  • 2-yr: +4 bps to 3.83%
  • 3-yr: +3 bps to 3.84%
  • 5-yr: +4 bps to 3.95%
  • 10-yr: +3 bps to 4.32%
  • 30-yr: +2 bps to 4.92%

• 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).
• Today's Data:
  • Initial jobless claims for the week ending April 18 increased by 6,000 to 214,000 (Briefing.com consensus: 212,000). Continuing jobless claims for the week ending April 11 increased by 12,000 to 1.821 million.
    • The key takeaway from the report is that there is nothing in the level of initial jobless claims—a leading indicator—that suggests the labor market is in a dire state.
  • The S&P Global U.S. Manufacturing PMI hit 54.0 in the flash reading for April, up from 52.3 in March.
  • The S&P Global U.S. Services PMI hit 51.3 in the flash reading for April, up from 49.8 in March.
  • Weekly natural gas inventories increased by 103 bcf after increasing by 59 bcf a week ago.
• Commodities:
  • WTI crude: +3.0% to $95.76/bbl
  • Gold: -0.7% to $4723.00/ozt
  • Copper: -0.8% to $6.08/lb
• Currencies:
  • EUR/USD: -0.2% to 1.1685
  • GBP/USD: -0.2% to 1.3469
  • USD/CNH: +0.1% to 6.8347
  • USD/JPY: +0.2% to 159.68
• The Day Ahead:
  • 10:00 ET: Final April University of Michigan Consumer Sentiment (Briefing.com consensus 47.6; prior 47.6)