Bond Market Update

Short End Paces Early Selling

• U.S. Treasuries are on track for a lower start with shorter tenors expected to show some early relative weakness. The market returned from the long weekend with little improvement in the Iran conflict. To the contrary, President Trump gave Iran's officials until Tuesday night to loosen its grip on maritime traffic through the Strait of Hormuz or face crippling strikes on its bridges and energy infrastructure. Crude oil inched above $115/bbl on Sunday evening before giving back its gain with some assistance from news that OPEC+ agreed to increase its output by 206,000 barrels per day starting in May. The ongoing focus on Iran has masked Friday's release of the Employment Situation report for March, which handily beat expectations. The report showed much stronger-than-expected Nonfarm Payrolls (178,000; Briefing.com consensus 51,000; prior -133,000) and Nonfarm Private Payrolls (186,000; Briefing.com consensus 51,000; prior -129,000), a dip in the Unemployment Rate (4.3%; Briefing.com consensus 4.4%; prior 4.4%), below-consensus Average Hourly Earnings growth (0.2%; Briefing.com consensus 0.4%; prior 0.4%), and a dip in Average Workweek (34.2; Briefing.com consensus 34.3; prior 34.3). The combination made for a welcome recovery from February's contractionary reading that was revised lower. Today's data will be limited to the 10:00 ET release of the ISM Non-Manufacturing Index for March (Briefing.com consensus 54.9%; prior 56.1%). Crude oil has dipped toward $110/bbl while the U.S. Dollar Index is down 0.1% at 99.98.
• Yield Check:
  • 2-yr: +4 bps to 3.87% (+7 bps from Thursday's settlement)
  • 3-yr: +4 bps to 3.90% (+7 bps from Thursday's settlement)
  • 5-yr: +2 bps to 4.01% (+6 bps from Thursday's settlement)
  • 10-yr: +1 bp to 4.36% (+5 bps from Thursday's settlement)
  • 30-yr: UNCH at 4.92% (+3 bps from Thursday's settlement)

• News:
  • The U.S. Senate will hold a confirmation hearing for Fed Chairman nominee Warsh on April 16.
  • Japan's Prime Minister Takaichi will travel to Australia to secure Japan's rare earth supply chain and discuss cooperation regarding the Strait of Hormuz.
  • China's government reported that its consumer goods trade-in program generated revenue of CNY433 bln in Q1.
  • The Bank of England is split on a best approach to the oil-related inflationary spike, according to FT.
  • The Bank of Italy trimmed its 2026 growth forecast to 0.5% from 0.6% while the outlook for 2027 was reduced to 0.5% from 0.8%.
  • India purchased its first shipment of crude oil from Iran since 2019.
  • India's March Services PMI hit 57.5 (expected 57.2; last 57.2).
  • Singapore's February Retail Sales fell 4.1% m/m (last 6.0%), rising 8.3% yr/yr (last -0.5%).
  • Spain's March Unemployment decreased by 22,900 (expected 10,300; last 3,600).
• Commodities:
  • WTI Crude: -1.2% to $110.25/bbl
  • Gold: +0.6% to $4708.80/ozt
  • Copper: +1.8% to $5.69/lb
• Currencies:
  • EUR/USD: +0.3% to 1.1546
  • GBP/USD: +0.4% to 1.3238
  • USD/CNH: -0.1% to 6.8781
  • USD/JPY: -0.1% to 159.55
• Data out Today:
  • 10:00 ET: March ISM Non-Manufacturing Index (Briefing.com consensus 54.9%; prior 56.1%)