Bond Market Update

Treasuries Slide as Oil Overtakes $100/bbl

• U.S. Treasuries are on track for a lower start after a night that saw some pressure on sovereign debt. Treasury futures began inching lower in early evening action, continuing their retreat into the night. The selling continued until early morning trade with Treasury futures hitting fresh lows in the past few minutes. Overnight trade saw the release of the latest policy Statement from the Bank of Japan, which did not call for a hike, but three out of nine policymakers voted in favor of an increase. The central bank now expects that inflation could reach 3.0% this fiscal year while the latest Consumer Expectations survey from the European Central Bank also showed a sharp increase in inflation expectations with the year-ahead outlook jumping to 4.0% from 2.5%. The U.S. session will feature a few economic reports, headlined by April Consumer Confidence (Briefing.com consensus 89.2; prior 91.8) at 10:00 ET. Later in the day, the U.S. Treasury will sell $44 bln in 7-yr notes. Crude oil has climbed back above $100/bbl while the U.S. Dollar Index is up 0.3% at 98.79.
• Yield Check:
  • 2-yr: +5 bps to 3.85%
  • 3-yr: +5 bps to 3.88%
  • 5-yr: +5 bps to 4.00%
  • 10-yr: +3 bps to 4.37%
  • 30-yr: +2 bps to 4.96%

• News:
  • China's National Development and Reform Commission blocked Meta's planned $2 bln acquisition of Chinese AI startup Manus.
  • The Bank of Japan lowered its domestic growth forecast for the year to 0.5% from 1.0% and raised its inflation forecast to 2.5-3.0% from 1.9-2.0%.
  • Moody's raised China's outlook to Stable from Negative.
  • The European Central Bank released its Consumer Expectations survey for March, showing a jump in year-ahead inflation expectations to 4.0% from 2.5% while the three-year outlook increased to 3.0% from 2.5%. The survey also showed that the economy is expected to contract by 2.1%, down from the previous forecast for a contraction of 0.9%.
  • Japan's March jobs/applications ratio fell to 1.18 from 1.19, as expected, and March Unemployment Rate rose to 2.7% from 2.6% (expected 2.6%). February BoJ Core CPI rose to 2.5% yr/yr from 2.2%.
  • Hong Kong's March trade deficit reached $89.1 bln (last deficit of HKD64.2 bln) as imports rose 41.2% m/m (last 29.9%) and exports jumped 35.8% m/m (last 24.7%).
  • Italy's February Industrial Sales rose 0.6% m/m (last -0.2%), increasing 0.5% yr/yr (last -0.8%). March PPI was up 4.4% m/m (last -0.4%), rising 4.2% yr/yr (last -2.7%).
  • Spain's Q1 Unemployment Rate rose to 10.83% from 9.93% (expected 9.80%) and March Retail Sales rose 4.1% yr/yr (last 2.3%).
  • Italy's February Industrial Sales rose 0.6% m/m (last -0.2%), increasing 0.5% yr/yr (last -0.8%). March PPI was up 4.4% m/m (last -0.4%), rising 4.2% yr/yr (last -2.7%).
  • Spain's Q1 Unemployment Rate rose to 10.83% from 9.93% (expected 9.80%) and March Retail Sales rose 4.1% yr/yr (last 2.3%).
• Commodities:
  • WTI Crude: +4.4% to $100.63/bbl
  • Gold: -2.3% to $4585.30/ozt
  • Copper: -2.2% to $5.886/lb
• Currencies:
  • EUR/USD: -0.3% to 1.1685
  • GBP/USD: -0.5% to 1.3466
  • USD/CNH: +0.3% to 6.8419
  • USD/JPY: +0.3% to 159.76
• Data out Today:
  • 9:00 ET: February FHFA Housing Price Index (Briefing.com consensus 0.2%; prior 0.1%) and February S&P Case-Shiller Home Price Index (Briefing.com consensus 1.2%; prior 1.2%)
  • 10:00 ET: April Consumer Confidence (Briefing.com consensus 89.2; prior 91.8)
• Treasury Auctions:
  • 13:00 ET: $44 bln 7-yr Treasury note auction results