Bond Market Update

Inching Lower Ahead of FOMC

• U.S. Treasuries are on track for a slightly lower start with shorter tenors set to lead the early weakness after a quiet night. Treasury futures spent the night in a sideways range before slipping to fresh lows during the past two hours. Meanwhile, other sovereign debt has seen limited movement amid a light news flow. The Wall Street Journal reported that President Trump is seeking an extended blockade of the Strait of Hormuz, but the market's response to the report was muted. Economic data released overnight showed an acceleration in Australia's CPI, though the Q1 reading was still a bit cooler than expected (4.1% yr/yr; expected 4.2%). Similarly, Spain's April CPI showed an increase that was smaller than expected (0.4% m/m; expected 0.6%). The U.S. session will feature the delayed release of February and March Housing Starts and Building Permits at 8:30 ET, followed by February and March New Home Sales at 10:00 ET. The FOMC will release its latest policy Statement at 14:00 ET with Jay Powell set to appear in his final press conference as Chairman at 14:30 ET. Crude oil is approaching $105/bbl while the U.S. Dollar Index is up 0.1% at 98.69.
• Yield Check:
  • 2-yr: +2 bps to 3.86%
  • 3-yr: +1 bp to 3.88%
  • 5-yr: +1 bp to 3.99%
  • 10-yr: +1 bp to 4.36%
  • 30-yr: +1 bp to 4.95%

• News:
  • Japan's Finance Minister Katayama said that her office is ready to respond to sudden moves in the foreign exchange market.
  • China is reportedly planning to double its refined fuel exports in May.
  • Australia's Treasury expects inflation to peak at higher levels, given the recent jump in energy prices.
  • The Times Shadow committee voted 5-4 to recommend no BoE policy change.
  • Australia's Q1 CPI was up 1.4% qtr/qtr, as expected (last 0.6%), rising 4.1% yr/yr (expected 4.2%; last 3.6%). March Monthly CPI Indicator was up 4.6% (expected 4.8%; last 3.7%).
  • Eurozone's April Business and Consumer Survey fell to 93.0 from 96.2 (expected 95.2). March Private Sector Loans rose 3.0% yr/yr (expected 3.1%; last 3.0%) and loans to nofinancials rose 3.2% (last 2.9%).
  • Spain's April CPI was up 0.4% m/m (expected 0.6%; last 1.2%), rising 3.2% yr/yr (expected 3.5%; last 3.4%). April Core CPI was up 2.8% yr/yr (last 2.9%).
  • Italy's April Consumer Confidence fell to 90.8 from 92.6 (expected 91.2) and Business Confidence fell to 87.9 from 88.7 (expected 88.0).
  • Swiss April ZEW Expectations rose to -30.3 from -35.0.
• Commodities:
  • WTI Crude: +3.0% to $102.93/bbl
  • Gold: -0.6% to $4580.10/ozt
  • Copper: +0.4% to $5.94/lb
• Currencies:
  • EUR/USD: -0.1% to 1.1703
  • GBP/USD: -0.1% to 1.3506
  • USD/CNH: UNCH at 6.8363
  • USD/JPY: +0.2% to 159.84
• Data out Today:
  • 7:00 ET: Weekly MBA Mortgage Index (actual -1.6%; prior 7.9%)
  • 8:30 ET: February and March Housing Starts (prior 1.487 mln) and Building Permits (prior 1.376 mln), March Durable Orders (prior -1.4%), Durable Orders ex-transport (prior 0.8%), March advance International Trade in Goods (prior NA), March advance Retail Inventories (prior NA), and March advance Wholesale Inventories (prior NA)
  • 10:00 ET: February and March New Home Sales (prior 587,000)
  • 10:30 ET: Weekly crude oil inventories (prior +1.93 mln)
  • 14:00 ET: April FOMC Decision (Briefing.com consensus 3.50-3.75%; prior 3.50-3.75%)